Adairs Limited Appendix 4E: Preliminary Final Report

ADAIRS LIMITED
APPENDIX 4E
PRELIMINARY FINAL REPORT
52 weeks ending 27 June 2021
1. DETAILS OF THE REPORTING PERIOD AND THE PRIOR CORRESPONDING PERIOD

Current Period: 29 June 2020 to 27 June 2021 (52 weeks)
Prior corresponding period: 1 July 2019 to 28 June 2020 (52 weeks)
2. RESULTS FOR ANNOUNCEMENT TO THE MARKET

Statutory results
Increase/ Change
Statutory comparison to previous corresponding period (Decrease) % $’000
Revenue from continuing operations Increase 28.5% 499,762

Profit after tax from continuing operations attributable to members Increase 80.7% 63,742
Net profit after tax for the period attributable to members Increase 80.7% 63,742
Underlying results
The table below presents the Group’s underlying financial results. These have been calculated to exclude the impact of (i) AASB 16
Leases, (ii) one-off costs associated with the transition to the new National Distribution Centre, and (iii) Mocka related acquisition
costs (including earn-out related adjustments) and (iv) the net JobKeeper wage subsidy benefit received and the amount returned
to the Government in 2H FY21. The underlying FY20 financial results were calculated on a comparative basis.
Increase/ Change
Underlying comparison to previous corresponding period (Decrease) % $’000
Revenue from continuing operations Increase 28.5% 499,762

Profit after tax from continuing operations attributable to members Increase 101.5% 75,412
Net profit after tax for the period attributable to members Increase 101.5% 75,412
For a reconciliation between statutory to Underlying NPAT, please refer to the Investor Presentation.
Franked
Amount per Amount per
Dividends/distributions ordinary share ordinary share
2021 Interim dividend 13.0 cents 13.0 cents

2021 Final dividend (resolved, not yet provided for at 27 June 2021) 10.0 cents 10.0 cents
Record date for determining entitlements to the dividend 9th September 2021
Payment date of Final dividend 23rd September 2021
Brief explanation of the figures reported above

The figures above represent the statutory results of the Group and the underlying results of the Group, adjusting for AASB 16 and
other non-recurring items.
For further explanation please refer to the attached financial statements and Investor Presentation accompanying this
financial report.
ANNUAL REPORT 2021 1

ADAIRS LIMITED
APPENDIX 4E
3. INCOME STATEMENT
Please refer to the attached financial statements for the 52 weeks ended 27 June 2021.
4. BALANCE SHEET
5. CASH FLOW STATEMENT

6. DIVIDEND DETAILS
Please refer to Note 25 of the attached financial statements for details of dividends paid in the 52 weeks ended 27 June 2021.
7. DIVIDEND OR DISTRIBUTION REINVESTMENT PLAN DETAILS

The company has not activated its Dividend Reinvestment Plan.
8. STATEMENT OF CHANGES IN EQUITY

9. NET TANGIBLE ASSET BACKING PER ORDINARY SECURITY AS AT 27 JUNE 2021
Previous
corresponding
Current Period period
Net tangible asset backing per ordinary security -$0.13 -$0.26
10. CONTROL GAINED OR LOST OVER ENTITIES IN THE FINANCIAL YEAR

Not applicable
11. DETAILS OF AGGREGATE SHARE OF PROFITS (LOSSES) OF ASSOCIATES

AND JOINT VENTURE ENTITIES
Not applicable
12. OTHER SIGNIFICANT INFORMATION

Refer to the commentary in Section 2.
13. FOREIGN ENTITIES
All entities comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards
Board.
14. COMMENTARY
For further explanation please refer to the ASX Release and Investor Presentation accompanying this preliminary final report.
15. AUDITED REPORT
The report should be read in conjunction with the attached audited financial statements for the 52 weeks ended 27 June 2021.
The audit opinion is unqualified.
2 ADAIRS LIMITED
ANNUAL REPORT 2021
ABOUT ADAIRS LIMITED ABOUT ADAIRS ABOUT MOCKA
Adairs Limited is Australia’s largest Adairs is a leading specialty retailer Mocka is a vertically integrated,
omni channel specialty retailer of home furnishings in Australia pure-play online home and living
of home furnishings and home and New Zealand with a national products designer and retailer
decoration products. We own footprint of stores across a number operating in Australia and
and operate two businesses in of formats and a large and growing New Zealand. Mocka sells its own
the category, Adairs and Mocka. online channel. Our strategy exclusive, well designed, functional
Both businesses are design led, is to present customers with a and stylish products in the Home
customer focused, and sell quality differentiated proposition, which Furniture and Décor, Kids and Baby
in-house designed product direct combines on-trend fashion products, categories. Delivering great product
to customers in Australia and quality staples, strong value and and compelling everyday value-
New Zealand. Adairs head office superior customer service. for-money is core to the Mocka
is in Melbourne, Australia. customer proposition.
For further information visit
For further information visit www.adairs.com.au For further information visit
our investor relations website www.mocka.com.au
www.investors.adairs.com.au
CONTENTS
2 Performance Highlights
4 Chairman’s Report
6 Managing Director and CEO’s Report
10 Corporate Social Responsibility
12 Corporate Governance Statement
13 Financial Report 2021
14 Directors’ Report
26 Remuneration Report (Audited)
42 Auditor’s Independence Declaration
43 Independent Auditor’s Report
49 Directors’ Declaration
50 Consolidated Statement of Profit or Loss
51 Consolidated Statement of Other
Comprehensive Income
52 Consolidated Statement of Financial Position
53 Consolidated Statement of Changes in Equity
54 Consolidated Statement of Cash Flows
55 Notes to the Financial Statements
96 Shareholder Information
99 Corporate Information
2021 ANNUAL GENERAL MEETING

11.00am on Wednesday, 20 October 2021
Due to continuing developments in relation to
COVID-19, this year’s AGM will be held as a virtual
meeting, using technology to facilitate shareholder
participation. Full details will be provided to all
shareholders in the Notice of Meeting.

PERFORMANCE
HIGHLIGHTS
GROUP SALES
+28.5%
with Online Sales
+51%, to $187m
ONLINE NOW
37% of Total Sales
Up from 32% last year
UNDERLYING
GROSS MARGIN
+410 bps
GM initiatives
continue to deliver
UNDERLYING
GROUP EBIT
of $109.1M
Up 97.3%,
(Pre AASB 16)
2 ADAIRS LIMITED
MOCKA GROWING
STRONGLY
Sales +31%
New CEO appointed
NATIONAL
DISTRIBUTION
CENTRE
Operational from
September 2021
LINEN LOVER
MEMBERSHIP
OVER 950,000
Members now
account for over 80%
of Adairs sales
CASH GENERATION
AND STRONG
BALANCE SHEET
Cash flow from
operations +14%
(pre AASB 16) and net
cash position now $26m
OPTIMISATION
OF STORE
PORTFOLIO
4 new stores,
6 stores upsized

CHAIRMAN’S
REPORT
4 ADAIRS LIMITED
MOCKA
Mocka has performed ahead of the expectations we had of
the business when we acquired it in December 2019. Since
then, our understanding of and confidence in the potential
for the business has continued to develop, especially the
scope for substantial further growth in Australia.
In June we announced an agreement with the Mocka
founders to finalise and bring forward the settlement
of the deferred consideration component of the Mocka
acquisition. The original sale and purchase agreement
provided for the deferral of 35% of the consideration to
be paid in FY21 and FY22 based on a formula linked to the
actual EBIT in those years. Bringing this forward enables
us to continue to invest in the short-term to realise
Mocka’s long-term potential, a period which lay beyond
DEAR SHAREHOLDER, the time horizon of the founders.
I am very pleased to present the 2021 Annual Report We recently announced the appointment of Vanessa
of Adairs Limited. Brennan as Chief Executive Officer of Mocka. Vanessa is
an experienced retail executive, having previously been
ANOTHER RECORD YEAR Chief Brand and Strategy Officer at global jewellery
The 2021 financial year saw COVID-19 continue to retailer Michael Hill International.
impact the lives of our customers, our team and the We are excited by the opportunity for Mocka and with
broader community. Against this challenging backdrop ongoing investment we expect to deliver continued
I am pleased to report that Adairs has again produced profitable growth.
a record year in terms of both sales and profitability.
While COVID-19 has brought focus to the Home category STRONG FINANCIAL POSITION
our success in FY21 is equally attributable to the strategic
AND DIVIDEND
pillars the Board and management team set prior to
COVID, underpinned by our vertically integrated omni- Adairs’ balance sheet remains strong with cash of
channel model, our unique product and our amazing $26 million and no outstanding debt at year end. Payment
team who continue to delight and inspire our customers of the Mocka deferred consideration (A$44.7 million) will
every day. occur in September 2021 to be funded from existing cash
and term debt facilities.
Our financial results for FY21 were excellent:
Given the underlying NPAT achieved in FY21 and the
› Group sales up 28.5% to $499.8 million
strong cash generation of the business, I am pleased to
› Group online sales of $187.0 million representing advise that the Board have declared a final fully franked
37.4%of Group sales dividend of 10.0 cents per share. This takes the total
› Underlying Group EBIT up 97.3% to $109.1 million dividend payout for the year to 23.0 cents per share.
(Pre AASB 16)
› Strong cash flow resulted in closing net cash of OUR OUTSTANDING TEAM
$26.0 million I joined the board of Adairs in November 2020 and one
› Declared final dividend of 10.0 cents per share aspect that has impressed me immensely in my first
fully franked. year is the passion, talent and resilience of our people.
Regardless of which team they come from – product,
We chose to return the net benefit of our FY21 JobKeeper marketing, in-store, digital, customer support, logistics
wage subsidy to the Australian Government. JobKeeper or executive – everyone in Adairs has a clear and united
was a welcome and necessary initiative, helping vision for the company. Importantly they also know how
employers and employees remain connected during a they individually contribute to delivering this vision.
period of significant economic disruption. Ultimately This is a credit to our CEO, Mark Ronan, and his dedicated
however, given our success in navigating this period, leadership team.
we felt it right to return this benefit to the Government.
On behalf of the Board I would like to thank all team
NATIONAL DISTRIBUTION CENTRE members for their unwavering commitment to our
business and the way in which they have individually
Construction of our new purpose-built National
responded to the challenges of the year. It has been an
Distribution Centre (NDC) commenced in May 2020 and
outstanding effort.
we are pleased to report that it will be fully operational by
the end of September 2021. The NDC is a key component
of our integrated omni-channel strategy to enable
customers to shop Adairs how, where and when they
choose, with the capacity and flexibility to support our Brett Chenoweth
business growth for the next 10 years. Chair

MANAGING DIRECTOR
AND CEO’S REPORT
Dear Shareholder, COVID-impacted years, each of which

had different lockdown experiences
I am pleased to report that FY21 has in terms of severity, duration and
delivered another record set of financial geography, we have reviewed our
and operational results for Adairs. FY21 performance against pre-COVID
This comes as the COVID pandemic levels (FY19). On this basis total sales
continues to impact our lives with (excluding Mocka which was not owned
multiple regional lockdowns announced in FY19) are up 31.9%, with online up
across Australia and New Zealand during 113.7% and like-for-like store sales up
FY21, the longest of which in Victoria 12.6%. This is an outstanding result and
lasted 16 weeks. While these lockdowns clearly demonstrates the strength of our
impacted our store performance there underlying strategies and the resilience
were key strategic mitigants which of our business.
played an important role in ensuring When reviewed by brand the underlying
we continued to grow both sales and financial results for FY21 are also excellent.
profitability, even as we cycled FY20
which was itself a record year. Our omni- ADAIRS FINANCIAL
channel model, strong product offering
AND OPERATIONAL
and engaged customer base collectively
ensured that COVID’s impact on our PERFORMANCE
business was significantly reduced. (EXCLUDING MOCKA)
Adairs sales finished up 22.1% over the
Group revenue grew 28.5% to
prior year and up 14.5% on a like-for-
$499.8 million and on a like-for-like
like basis1.
basis1 by 16.5%. Group online sales grew
to $187.0 million and now represent In a year with significant disruptions
37.4% of total sales. Underlying Group caused by government mandated store
EBIT2 finished up 97.3% against the prior closures we saw our omni channel
year at $109.1 million. strategy deliver this strong sales growth.
Given the inherent difficulties in Customers were comfortable moving
assessing our performance across two from one channel to the other and back
1. Like-for-Like Sales Growth has been adjusted for any store closures and is calculated on a store-by-store daily basis
(where only stores open on the same day in each corresponding period have been included).
2. Underlying group EBIT excludes the impact of (i) AASB 16, (ii) one-off costs associated with the transition to the
new National Distribution Centre, (iii) Mocka related acquisition costs (including deferred consideration fair-value
adjustments), and (iv) JobKeeper wage subsidy received in 1H FY21 and returned to Government in 2H FY21.
6 ADAIRS LIMITED
retail environment, which saw generally of the original business case when the
lower stock levels across the industry business was acquired. Underlying
and strong customer demand, helped gross margin rate declined by 60bps to
contribute to this result. However, the 51.2% reflecting the impact of additional
ongoing focus of the team on continuing promotional activity in the second half
our coordinated program of sourcing as stock levels returned to more normal
and retail pricing initiatives combined levels and the business cycled store
with reducing the depth and length of closure periods in the prior year.
promotional activity drove this result.
Mocka’s CODB as a percentage of
Over the year we reduced the number of
sales increased from 17.3% to 18.4%
storewide promotional events by 44 days
as we continued to invest in both
compared to the previous year, which we
marketing and talent. These initiatives
expect will be maintained going forward.
are consistent with the intention to
CODB expenditure increased by 12.2% invest in the Mocka business to build
with some increases in variable costs our management capabilities, raise
related to the strong sales growth, an our brand awareness, particularly in
increase in online marketing expenditure Australia, and position us for strong
and further investment in talent and growth in coming years.
capability within the support office
Mocka’s underlying EBIT for FY21 was
to drive key growth areas across the
$12.4 million with an underlying EBIT
business. Adairs also incurred one-
margin of 20.6%.
off costs of $2.7 million in relation to
the new National Distribution Centre Throughout the year Mocka undertook a
again depending on the circumstances project and $7.6 million in relation to couple of significant projects to enable
at the time. Total store sales were up the revaluation of the Mocka deferred our future growth. The New Zealand and
18.1% for the year or 7.4% on a like-for- payments. These investments will reward Australian websites were re-platformed
like basis. Online sales grew by 33.2% to shareholders as we continue to build in September 2020, with Mocka
$126.9 million and accounted for 28.9% upon our omni channel capabilities. transitioning well with no disruption to
of the Adairs business total sales (up our customers or trading through this
from 26.5% in FY20 and 17.1% in FY19). As announced with our first half
period. We also doubled the size of our
results, we chose to return the net
Linen Lovers members increased Australian warehouse in Brisbane to
benefit of the FY21 JobKeeper wage
by c.15% and now exceed 950,000. support the continuing growth of Mocka
subsidy received to the Australian
Given the paid for nature of our loyalty as we continue to build our capacity to
Government. JobKeeper was a welcome
program, and the fact that Linen Lover support the growth of the business.
and necessary initiative when it was
members now account for over 80% of launched however given our success To further support this growth, Adairs
sales, this is an excellent barometer of in navigating the impact of COVID-19 announced in June the early settlement
our customer engagement and provides we felt it right to return the wage of the deferred consideration payable
a solid and growing base for future sales. subsidy component. This was repaid and to the Mocka founders. This was an
Adairs gross lettable area (store recognised in the Company’s financial important step as it enables Mocka to
floor space) grew by 8.2% through a results in 2H FY2021. continue to invest in the short-term to
combination of new and upsized stores. accelerate the realisation of the long-
Overall Adairs achieved significant
We opened four new Homemaker stores, term potential, a period beyond the time
operating leverage with CODB as a
upsized six stores (four Homemakers horizon of the founders.
percentage of sales declining 350bps
and two regular stores) and refurbished from 42.8% to 39.3%. Strong growth in The Blake family, who founded the
three stores. Our store rollout and sales across both channels, combined business, have done an exceptional job in
upsizing strategy continues to deliver a with this operating leverage delivered building the Mocka brand to date. I want
strong return on investment and healthy underlying EBIT growth of 98.2% to to take this opportunity to thank them
profit growth, with all stores increasing $96.7 million representing an EBIT margin for the work they have done in building
their sales and profitability following of 22.0% (up from 13.5% in FY20). a great brand and their assistance
upsizing. Importantly, our pipeline for in transitioning to independent
new and upsized stores is healthy with MOCKA FINANCIAL management since Adairs acquisition.
up to 10 properties to be developed
AND OPERATIONAL We look forward to their ongoing support
in FY22.
PERFORMANCE as we aim to make them proud of the
Managing gross margin has continued brand they created as it grows over the
Mocka achieved total sales of
to be a key focus, with Adairs gross coming years.
$60.2 million, 30.9% up on its FY20
margin rate increasing by 520bps to results (noting that Adairs ownership
66.7%. There is no doubt that the FY21 was for 30 of these 52 weeks) and ahead

The appointment of Vanessa Brennan as holdings also reflect that we currently DIVIDENDS
Chief Executive Officer of Mocka is the expect to hold slightly more inventory
Given the underlying NPAT achieved
next step in this transition. Vanessa is than normal to accommodate delays in
in FY21 and our strong cash position,
an experienced retail executive, having shipping inventory from various source
the Board has declared a final fully
been Chief Brand and Strategy Officer countries.
franked dividend of 10.0 cents per share.
at global jewellery retailer Michael
The Company has considerable The Record Date for the dividend will
Hill International and is well placed to
headroom with finance facilities of be 9 September 2021 with payment
continue Mocka’s strategy of delivering
$96.5 million available until July 2023 on 23 September 2021. This takes the
strong and profitable growth by gaining
which represents an extension of four total dividend payout for the year to
market share in a very large product
months on its previous expiry to better 23.0 cents per share.
category.
align with financial periods.
We remain very confident in, and NATIONAL DISTRIBUTION
The Company expects to pay both the
ambitious for, the long-term success
FY2021 final dividend ($16.9 million)
CENTRE
of Mocka. I am pleased to report that our new
and the deferred Mocka consideration
(NZ$48.0 million) in September 2021. DHL-operated National Distribution
STRONG CASHFLOW AND Centre (‘NDC’) will be fully operational
These will be funded by existing cash
BALANCE SHEET and term debt facilities. by the end of September 2021. While
Given the outstanding results the group this is approximately three months later
converted this into strong operating With a strong balance sheet the than originally foreshadowed I wanted
cashflow which saw it close FY21 with company will continue to assess to congratulate all of those involved in
net cash of $26.0 million compared to a potential acquisition opportunities that its build and commissioning which had
net debt position of $1.0 million a year meet its strict return requirements. to accommodate a number of COVID-
earlier. Both Adairs and Mocka finished related delays in the delivery of building
the year with significantly higher levels materials from offshore suppliers, and
of inventory than the prior year which COVID-related restrictions throughout
was artificially low due to the actions we the building timeline.
took to combat COVID-19 in the second
The NDC is a key component of our
half of FY20. The higher inventory
integrated omni-channel strategy to
8 ADAIRS LIMITED
MANAGING DIRECTOR
AND CEO’S REPORT
better enable customers to shop Adairs customers and team we contributed

how, where and when they choose. The over $330,000 to Orange Sky in FY21
new facility will have the capacity and which, together with our volunteering
flexibility to support our business growth efforts, has provided 8,733 washes,
for the next 10 years across all channels. 5,001 hot showers and 9,184 hours of
Consolidating our multiple DC operations conversation to those experiencing
into a single facility will improve stock homelessness.
flow and online fulfilment, increase stock
Adairs is also a major sponsor of
availability, and improve service levels
the Melbourne Boomers, a women’s
for both customers and stores during
basketball team in the WNBL. This
peak trading periods.
ongoing partnership is aimed at
Once fully transitioned we anticipate providing an opportunity for the
annual savings of c.$3.5 million per community to see and interact with
annum over existing operations (with wonderful, strong, healthy role models
pro-rata savings in FY22). as well as providing women with the
opportunity to play professional sport
OUR CULTURE AND in Australia.
VALUES
Having the right values and culture
OUR TEAM
embedded in our business is critical to Critical to our success is our team,
our long-term success in providing our whose commitment and excellence
customers with the retail experience underpin the delivery of our
performance and growth plans. FY21 OUTLOOK
they desire, growing shareholder value,
and in attracting and retaining team has been another challenging year for The strategic pillars we set prior to
talent. This year we have significantly all of them and I am incredibly proud COVID have enabled the business to
enhanced our Corporate Governance in the way they have united with the deliver outstanding financial results
Statement to address issues of interest common goal of delivering exceptional in FY21, underpinned by our vertically
to all our stakeholders. These include customer experiences that deliver integrated omni-channel model and our
the ethical sourcing of products, outstanding results. This has been seen amazing team who continue to delight
sustainability, modern slavery, gender not only from a financial perspective, and inspire our customers every day.
diversity and climate change. In many but also in relation to our ability to adapt
In considering the FY22 outlook it should
of these areas we have made excellent to the changing circumstances across
be noted that we continue to operate in
progress however we also acknowledge the course of the year. I can’t thank the
a COVID impacted environment and need
that much remains to be done and we Adairs and Mocka teams enough for
to remain prepared to act and adapt to
undertake to be transparent and timely their commitment to the business over
significant business disruptions at short
in our disclosures around our progress. the last 18 months.
notice. As has been proved over the last
Our Corporate Governance Statement I would like to also acknowledge the two years our strategic pillars provide
can be viewed on our investor relations continued support of our suppliers, strong mitigants in these conditions and
website (investors.adairs.com.au). In landlords and other business partners should see us continue to take market
addition to setting out our governance who play a key role in ensuring we share. That said, the frequency, duration
framework, it also sets out our social deliver against our strategic growth and extent of Government imposed store
and environmental initiatives, and details initiatives and remain the leading omni closures due to COVID-19 will remain
the high standard of ethics, integrity channel retailer of home furnishings in a significant factor in our financial
and behaviour we require and expect Australia and New Zealand. performance over FY22.
from the entire Adairs team and all of Finally, I would like to thank our many Thank you for your continued support.
our suppliers. customers, both longstanding and new.
We exist to serve our customer’s home
OUR COMMUNITY needs and in being totally focussed on
Our partnership with Orange Sky our customers we can help them create
continues to flourish and is a matter a home they love and ensure that our Mark Ronan
of great pride to everyone at Adairs. shareholders benefit through profitable Managing Director and CEO
Orange Sky is an outreach organisation growth.
providing free laundry, shower services
and non-judgmental conversation
with the many people experiencing
homelessness across Australia and
New Zealand. I’m delighted to report
that thanks to the generosity of our

CORPORATE SOCIAL
RESPONSIBILITY
10 ADAIRS LIMITED
Adairs is committed to
supporting the community
that supports us, through
a number of initiatives.
“We’re on a mission
ORANGE SKY to help positively
Adairs is proud to support Orange Sky, an outreach connect the 1 in every
organisation providing free laundry and shower
services to people experiencing homelessness across
200 Australians who
Australia and New Zealand with a mission to positively are experiencing
connect communities. Orange Sky believes that all homelessness.”
people should have access to basic human needs
such as clean clothes, safe hot showers, and most IMPACT IN 2020
importantly, genuine non-judgemental conversation. Although 2020 brought challenges that
Orange Sky also assists people who are affected by none of us could have predicted, Orange
temporary homelessness through natural disasters, Sky remained committed to supporting
such as cyclones, floods, bushfires, and earthquakes. our friends experiencing homelessness
by providing access to free laundry, warm
From humble beginnings in 2014 when they operated showers and genuine conversation.
one van with two washers and dryers in a park in
13,701
Brisbane, Orange Sky now service over 300 locations
across Australia and New Zealand with a network of
31 vans and over 1,700 volunteers. Vans are based in
metropolitan, regional and remote locations, where people positively connected
anyone who wants to use their service can do so
freely, without assessment or judgement.
Adairs supports Orange Sky in a number of ways: 8,308
› Adairs team members across all levels of the
Shifts
company are given the opportunity to volunteer
with Orange Sky in location across Australia
› A
ll profits from the sale of Adairs in-house designed
reusable totes (introduced to replace single-use 31
bags) go to Orange Sky
Vans in operation
› A
dairs collects donations made via in-store
donation boxes.
38,125
In FY21 Adairs contributed over $330,000 to Orange
Sky which, together with our volunteering efforts,
has provided 8,733 washes, 5,001 hot showers
and 9,184 hours of conversation to our friends Washes
experiencing homelessness.
MELBOURNE BOOMERS
Adairs is a proud major sponsoring partner of the 5,120
Melbourne Boomer’s, an Australian professional Warm, safe
women’s basketball team participating in the Women’s
National Basketball League. For thousands of girls showers
who aspire to play at the elite level in Melbourne,
the Boomers’ provide local access to a national
competition and has produced more Australian Opals,
World Champions and Olympians than any other club
55,426
in Australia. Hours of genuine
conversations
However, it’s not just about elite sport. We love
that the Boomers provide an opportunity for the
1,735
community to see and interact with wonderful,
strong, healthy role models.
Volunteers
https://OrangeSky.org.au/

CORPORATE
GOVERNANCE
STATEMENT
CORPORATE GOVERNANCE STATEMENT

Adairs has fully followed the recommendations of the ASX Corporate Governance
Council’s Principles and Recommendations (4th Edition) throughout the reporting
period. Further details are set out in the Group’s Appendix 4G and Corporate
Governance Statement, authorised for issue by the Directors on 19 August 2021,
which are available to be viewed on the Group’s investor relations website at:
www.investors.adairs.com.au
12 ADAIRS LIMITED
FINANCIAL
REPORT
2021

DIRECTORS’
REPORT
Your directors submit their report on the consolidated entity, being Adairs Limited (the “Company”) and its subsidiaries
(the “Group”) for the 52 weeks ended 27 June 2021 (“FY2021” or “FY21”).
DIRECTORS
The following persons were directors of Adairs Limited during the period and up to the date of this report unless otherwise stated.
Brett Chenoweth (appointed 16 November 2020)
Michael Cherubino
Kiera Grant
David MacLean
Trent Peterson
Mark Ronan
Kate Spargo
Simon West
Michael Butler (retired 26 October 2020)
Information on qualifications and experience of directors is included on pages 21 to 23 of this report.
Principal Activities
During the period, the principal continuing activities of the Group consisted of the retailing of homewares, furniture and home
furnishings in Australia and New Zealand, through both retail stores and online channels.
Dividends
In respect of the 52 weeks ended 27 June 2021, an interim dividend of 13.0 cents per share was paid to the holders of fully paid
ordinary shares on 25 March 2021 and the directors have declared the payment of a final dividend of 10.0 cents per share, to
be paid to the holders of fully paid ordinary shares on 9 September 2021 (Record Date) with payment on 23 September 2021
(Payment Date).
This takes the total dividend for the full year to 23.0 cents per share, with dividends franked to 100% at the 30% corporate income
tax rate.
2021 Operating and Financial Review

The profit from ordinary activities after income tax for FY2021 amounted to $63.7 million (FY2020: $35.3 million).
The Directors’ Report includes references to Non-IFRS financial measures such as Underlying Earnings Before Interest and Tax
(Underlying EBIT), Underlying EBIT Margin, Underlying EBITDA (Underlying EBIT excluding depreciation and amortisation),
Gross Profit, Underlying Gross Margin and Like-for-Like (LFL) Sales Growth. These are all unaudited measures.
EBIT and other Non-IFRS terms (described above) are used as a measure of financial performance by excluding certain variables
that affect operating profits but which may not be directly related to all financial aspects of the operations of the group. These are
not measures of operating income, operating performance or liquidity under IFRS. Other companies may calculate such measures
in a different manner to the Group.
The Underlying EBIT of the Group for FY2021 was $109.1 million (FY2020: Underlying EBIT $55.3 million).
14 ADAIRS LIMITED
FY21 FY20
Continuing Operations $’000 $’000
Statutory profit after income tax for continuing operations 63,742 35,281
Add back:
Finance expenses 7,457 6,250
Interest income (31) (90)
Income tax expenses 31,548 17,510
Statutory EBIT (Non-IFRS) 102,716 58,951
Significant items:
Impact of AASB 16 Leases1 (3,930) (2,195)
Costs associated with the transition to the National Distribution Centre 2,698 —
Mocka acquisition costs (including earn-out related adjustments) 7,583 3,884
Net benefit of the JobKeeper wage subsidy — (5,355)
Underlying EBIT (Non-IFRS) 109,067 55,285
The table below sets out the operating results for FY2021 compared to the operating results for FY2020.
FY21 FY20 Change

Continuing Operations $’000 $’000 %
Revenue 499,762 388,933 28.5%

Gross Profit (Non-IFRS) 303,293 222,119 36.5%
Gross Profit Margin (Non-IFRS) 60.7% 57.1% +360 bps
Underlying EBIT (Non-IFRS) 109,067 55,285 97.3%
Underlying EBIT Margin (Non-IFRS) 21.8% 14.2% +760 bps
Results Summary
While FY2021 continued to be impacted by COVID-19 the strength of the Group’s omni-channel business model saw the Group
deliver another record year with revenue up 28.5% to $499.8 million. On a like-for-like basis, sales increased by 16.5% driven by
the continued success of our core strategies.
The Group’s omni-channel strategy continued to progress strongly during the year, delivering sales growth across the Group. Group
online sales grew by 50.6% to $187.0 million and now represent 37.4% of total sales (up from 34.8% on a directly comparable basis
after annualising Mocka’s prior year contribution).
The Group’s strong sales performance, uplift in gross margin and disciplined cost control delivered a record underlying Group EBIT2
of $109.1 million, 97.3% up on last year. Adairs contributed $96.7 million of this EBIT result and Mocka $12.4 million.
Adairs Business
Total sales for Adairs of $439.6 million was 22.1% up on the prior year, with total like-for-like sales3 up 14.5%. Store sales were
up 18.1% for the year as the segment cycled the Government mandated nation-wide store closures in Q4 FY2020. However, store
like‑for-like sales were up 7.4% and up by 12.6% over the pre-COVID-19 levels achieved in FY2019. Online sales were 33.2% up on
last year, with ongoing investment in this channel delivering strong results. Total digital channel4 sales now equate to 41% of total
sales for Adairs.
1. The impact of AASB 16 Leases resulted in an earnings shift in the consolidated statement of profit or loss from Occupancy expenses under AASB 117 to Depreciation and amortisation
expenses and Finance expenses under AASB 16.
2. Underlying EBIT excludes the impact of (i) AASB 16 Leases, (ii) costs associated with the transition to the new National Distribution Centre, (iii) Mocka related acquisition costs
(including earn-out related adjustments), and (iv) the net JobKeeper wage subsidy benefit received and returned to Government.
3. Like-for-Like Sales Growth has been adjusted for any store closures and is calculated on a store-by-store daily basis (where only stores open on the same day in each corresponding
period have been included).
4. Digital channel sales are the total of online sales and sales of stock not ranged in store but where the order is placed by the customer within the store and fulfilled from the
central warehouse.

Directors’ Report
Adairs continued to optimise the store portfolio, opening four new Homemaker stores, upsizing six stores and refurbishing three
stores through the year. Total retail floor space, as measured by gross lettable area (GLA), increased by 8.2% to 66,896 square
metres. The store rollout and upsizing strategy continues to deliver healthy profit growth and return on investment, with all stores
increasing their sales and profitability following upsizing.
Stronger sales were accompanied by further improvement in Underlying Gross Margin5 within the Adairs business, which increased
by 520bps to 66.7%. This was achieved through a coordinated program of sourcing and retail pricing initiatives combined with a
focus on reduced depth and length of promotional activity.
Adairs’ cost of doing business (CODB) reduced by 350bps from 42.8% of sales in FY2020 to 39.3% of sales in FY2021. Increased
investment in online marketing delivered strong returns throughout the year and further investment in technology, talent
and capability to drive key growth areas across the business into FY2022 and beyond. Adairs also incurred transition costs of
$2.7 million in relation to the new National Distribution Centre project and $7.6 million in relation to the revaluation of the Mocka
earn-out liabilities.
In February 2021, the Board determined that based on the performance of the Company it was appropriate to repay the net
JobKeeper wage subsidy benefit of $6.1 million received during 1H FY2021 to the Australian Government. This was repaid and
recognised in the Group’s financial results in 2H FY2021.
Mocka Business
Mocka achieved total sales of $60.2 million which was 30.9% up on the prior year6 (including the full year of FY20) and ahead of
the original business case when the business was acquired. Underlying Gross Margin rate declined by 60bps to 51.2% reflecting the
impact of additional promotional activity in Q4 as stock levels returned to more normal levels and the business cycled accelerated
COVID-related growth in the prior year.
Mocka’s costs of doing business (CODB) as a percentage of sales increased from 17.3% to 18.4% due to increased investment
in both marketing and talent. These initiatives are consistent with the intention to invest in the Mocka business to raise its
brand awareness, particularly in Australia, and position it for strong growth in coming years. In a corelated development Adairs
announced in June the early settlement of the deferred consideration payable to the Mocka founders. This was a positive and
important development for Mocka which enables the company to continue to invest in the short-term to accelerate the realisation
of the long-term potential, a period beyond the time horizon of the founders.
Capital Management
The Group experienced strong cashflow which saw its net cash position rise to $26.0 million at the end of June 2021 from a net
debt position of $1.0 million a year earlier. Both Adairs and Mocka are carrying significantly higher levels of inventory compared
to the prior year which is in line with the normal trading pattern and flow of inventory for both businesses and includes additional
allowances to accommodate delays in shipping inventory from source countries.
The Group has complied with all of its bank covenants and continues to have significant headroom. The Group will continue to
assess potential acquisition opportunities that meet its strict return requirements and has finance facilities of $96m available until
31 July 2023 which represents an extension of four months on its previous expiry which was renegotiated after the reporting date.
The Group expects to pay both the FY2021 final dividend ($16.9 million) and the deferred Mocka consideration (NZ$48.0 million/
A$44.7 million) in September 2021. These will be funded by existing cash and term debt facilities.
Adairs Strategic Update

The Group believes its existing underlying strategies remain appropriate and that its performance both operationally and
financially in both FY2021 and FY2020 given their pandemic-related challenges are evidence of this. Adairs will continue to pursue
its vertically integrated omni-channel model which it believes will deliver significant growth in shareholder value.
Set out below are the five key drivers of this growth.
5. Underlying Gross Margin is Gross Profit excluding Online distribution costs (postage).
6. Includes the period prior to December 2019 which was outside of the Group’s ownership.
16 ADAIRS LIMITED
Our proven and resilient business model
› Strong brands that are owned and controlled. This enables a lower cost of customer acquisition and retention, offer exclusive
product and deliver higher margins.
› A large and loyal customer base with over 950,000 paid up members of our proprietary loyalty program, Linen Lovers.
Membership numbers continue to grow strongly each year (with a CAGR7 14.5% of the last 5 years). Linen Lovers are highly
engaged, visiting Adairs more often and spending more each visit than non-members (accounting for over 80% of Adairs
sales in FY2021).
› High exposure to the accelerating trend to online shopping with digital channel shoppers now representing c.48% of group
sales. Continue to win market share of this channel as customers transition to online/omni.
› A vertical supply chain which enables control of the range, quality, cost and timing of the product offering. It also makes each
business more agile and responsive to changing markets and provides for significantly higher gross margins and levels of
profitability.
Our profitable store formats

› Stores provide a valued and trusted engagement point with our customers. Our experienced, customer-friendly store team can
create and inspire a customer’s vision, deliver a personalised and tailored experience and increase sales conversion and loyalty.
› Our store portfolio is profitable and with relatively short lease terms we are able to take advantage of profitable new store and
upsizing opportunities whilst optimising the portfolio where appropriate.
› Larger stores are more profitable and significant upsizing opportunities remain within the current portfolio. Upsizing our stores
allows us to showcase more products/categories and typically delivers a c.60% increase in store contribution amount. To date
we have upsized 21 stores and believe a further 20-25 upsize opportunities remain over the next few years.
Our digital transformation

› Our multi-channel offer gives us a larger total accessible market (TAM), significant synergies across channels, and delivers
customers a superior and more flexible shopping experience.
› We are focused on the development of our digital channel and accelerating our digital transformation through additional
investment in customer acquisition, customer experience, technology and our team.
› Being omni is key as customers that engage with Adairs across multiple channels make purchases more often and spend more
with each purchase than those who only engage via one channel.
› There are valuable Adairs/Mocka cross-learnings which benefit both brands.
Mocka’s growth potential

› Mocka’s Australian brand awareness is growing rapidly – they have a low market share in a very large category, and we have
fast-tracked the expansion of our Australian warehouse facilities to support our growth. Mocka’s Australian website visits are
up 33.0% and Australian sales are up 28.9% in FY2021 over the prior year.8
› We are investing in the significant opportunities to expand Mocka’s product category width and depth and to optimise our
supply chain planning and management team.
› New CEO (Vanessa Brennan) joins in September 2021 and will drive Mocka’s growth strategy. Vanessa has strong retail and
digital experience, having been Chief Brand and Strategy Officer at global jewellery retailer Michael Hill International and most
recently a consulting partner at PwC in its Customer, Retail and Digital Transformation practise.
Omni Supply Chain Strategy

› Adairs’ new purpose-built National Distribution Centre (NDC) is expected to be fully operational from September 2021 with DHL
as our 3PL partner and operator.
› The NDC is a key component of our integrated omni-channel strategy to better enable customers to shop Adairs how, where
and when they choose and will have the capacity and flexibility to support our business growth for the next 10 years across all
channels.
› Consolidating Adairs multiple warehouse operations into a single NDC will improve stock flow and online fulfilment, increase
stock availability, and improve service levels for both customers and stores during peak trading periods.
› Annual savings of c.$3.5 million per annum are anticipated once the transition from our current warehouses is complete
(with a pro‑rata saving expected in FY2022).
7. Compound annual growth rate.

8. Includes the period prior to December 2019 which was outside of the Group’s ownership.

Directors’ Report
Material Business Risks

There are a number of risk factors both specific to the Group and of a general nature which may impact the future operating
and financial performance of the Group. The performance of the Group is influenced by a variety of general economic and business
conditions, including levels of consumer spending, inflation, interest and exchange rates, access to debt and capital markets and
government policies.
The specific material business risks that are likely to have an effect on the financial prospects of the Group and their
mitigants include:
Risk Explanation Mitigation
Major economic The economic impact of the COVID-19 pandemic could The Group proactively and conservatively
downturn worsen. While unemployment, housing prices and manages its business based upon its
consumer sentiment are presently favourable this could assessment of the likely future environment
change. Consumers may consider many of the Group’s in which it operates. This includes planned
products to be discretionary goods, and sales levels are responses to changing economic conditions
sensitive to consumer and retail sentiment as a result. and ensuring that its cost base is aligned to
If consumer and retail sentiment were to materially its expected sales levels and that it retains
decline, this will likely reduce demand for the Group’s access to liquidity.
products and adversely affect financial performance.
Business The COVID-19 pandemic continues to require the closure Adairs has a dedicated Risk and Compliance
interruption of Adairs stores in impacted regions for varying times. Manager responsible for business continuity
In addition to their impact on the retail environment and plans across all aspects of the Company’s
general economic conditions, unforeseeable events such operations. Scenario-based training on critical
as natural disasters, wars, strikes and epidemics have incidents are undertaken quarterly. Supplier
the potential to materially impact the Group through concentration and counter-party risk is
their impact on supply chain, consumer behaviour and monitored and managed as required.
corporate operations. Some may also pose a threat to
the health and safety of those who shop and work at the
Group’s businesses. These events can arise rapidly with
little or no warning and their duration and the subsequent
recovery period is uncertain and may be protracted.
Availability of The availability of funding and management of capital The Group has a strong and long-standing
funding and and liquidity are important to fund the Group’s business relationship with its primary lending bank and
liquidity operations and growth objectives. Reduced access to its group term debt facilities are in place and
liquidity increases the risk of insolvency in the event of recently extended until July 2023. The Group
a rapid and extended decline in sales. undertakes detailed short and medium term
cashflow forecasts, including stress testing
to ensure there is sufficient headroom to
accommodate unforeseen material shocks.
Customer’s buying Many of the Group’s products are considered to be The Group has a highly experienced product
habits or seasonal discretionary goods, particularly products in the Group’s development team who actively monitor and
trading patterns fashion item lines where consumer preferences and tastes forecast fashion trends domestically and
may change can change quickly. Consumer demand for these products internationally. The company undertakes
is sensitive to the Group’s fashion and design selections range review processes prior to purchase and
and product range. A broad-based or series of significant post season reviews to capture key learnings.
misjudgements in interpreting product and fashion Further category expansion has diversified
trends and over estimation of the quantum of demand risk across more product groups.
for these products could adversely affect the Group’s
financial performance.
18 ADAIRS LIMITED
Competition may The competitive environment in which the Group Competitor activity is monitored on an
increase or change operates in is relatively stable, however there are low ongoing basis. Having exclusive on-trend
barriers to entry so there is a risk that the Group may product, a market leading customer service
lose market share to new or existing competitors. The culture and a popular and effective customer
Group’s competitive position may deteriorate as a result loyalty program (Linen Lovers) are the
of increased competition, and customers may choose primary defences to new competition.
to purchase products from its competitors rather than
from the Group which could lead to downward pressure
on margins and subsequently have an adverse impact on
the Group’s financial performance. There is also the risk
that the Group does not act on opportunities to increase
market share if our competitor’s circumstances change in
the current environment.
Cyber security and A significant proportion of the Group’s business is Protection of customer data, corporate
IT infrastructure conducted online and involves the collection of customer applications and IT infrastructure is managed
data. This includes Adairs’ Linen Lover loyalty program. by a control framework and the continuing
The protection of customer and corporate data, and our focus on system control improvements,
digital infrastructure, is critical to our operations and a supported by an established and embedded
breach could have significant reputational, financial and security strategy across the organisation
regulatory implications for the Group. which includes the real-time services of
external security specialists. Periodic cyber
security audits are undertaken.
Regulatory The Group is subject to applicable laws, regulations and The Group has a dedicated Risk and Compliance
compliance contractual arrangements and is exposed to adverse Manager appointed to monitor, record,
regulatory or legislative changes. Breaches or adverse and ensure compliance with all regulatory
changes could result in negative impacts on the Group’s requirements. In-house compliance training
reputation and profitability, the imposition of significant and an internal audit function are supported
fines or other adverse consequences. by external legal advisors who understand our
business and are readily available.
Environmental, The Group’s stakeholders (across customers, shareholders The Group meets regularly with shareholders
social and and team) have expectations for the Group on a range and ESG rating agencies to discuss the
governance (ESG) of important environmental, social and governance company’s current and proposed initiatives.
responsibility matters including its governance structure, the impact ESG initiatives are reported upon annually in
of its activities on climate change, the transparency and the Adairs Corporate Governance Statement.
practices of its supply chain, and the sustainability of Traceability is already underway to ensure the
its business operations. A failure to acknowledge and Company meets its obligations under Modern
adequately address these expectations could negatively Slavery legislation. The Group has a formal
impact the Group’s reputation and profitability. sustainability strategy under development
that consolidates current initiatives across
the business, such as Global Organic Textile
Standards, Oeko-Tex, Australian Packaging
Convention and Responsible Down Standards.
Workplace health The Group recognises its moral and legal responsibilities The Group has an ongoing program to embed
and safety to provide a safe and healthy work environment for a safety culture across the business through
its team and shopping environment for its customers. training and leadership. Quarterly health
Any failure to adequately address these responsibilities and safety reports are provided to the Audit
could result in serious injury and/or death and negatively and Risk Committee. An external health and
impact the Group’s reputation and profitability including safety audit was undertaken in FY21 with no
via the imposition of significant fines or other adverse material adverse findings. COVID-19 health
consequences. management plans have been implemented
across the business.

Directors’ Report
Management The Group has a number of executive team members Succession plans are being developed for all
succession considered key to the success of the Group by key management personnel. Talent mapping
its stakeholders. A failure to adequately plan for is currently being completed across the
their succession may result in the appointment business to identify key team members
of inappropriate persons, high turnover of senior and roles. A senior leadership development
management, loss of market share, reputational damage program has been developed with the
and a decline in investor sentiment towards the Company. Melbourne Business School which seeks to
develop the leadership capabilities of the
next-level of talent within the business.
Major projects The Group has a number of major projects underway Major projects are overseen by a steering
which need to be delivered on time and within budget. committee to appropriately manage costs
These include a new National Distribution Centre (NDC) and resources. The NDC operator (DHL) has a
which is expected to be operational by September 2021. core competency in project management and
This will involve transitional arrangements from existing supply chain execution.
distribution centres which could lead to material business
disruption and costs if not managed appropriately.
Another major project underway is an upgrade of our
digital platform. Given online sales are approaching
40% of Group sales the successful implementation of
this upgrade is critical.
Supply chain risk The Group currently sources c.93% of its products from The Group is well advanced in a supplier
outside Australia (primarily China, India and Bangladesh). profiling exercise to identify and assess
Failure to adequately diversify the supply chain both opportunities for consolidation and/or
geographically and/or by supplier volume raises risks diversification of suppliers and their country
associated with supplier concentration, geo-political of origin to reduce risk in its supply chain.
exposure, raw material supply, and climate risk.
Conduct risk It is critical that customers have trust and confidence The Group’s approach to conduct risk
in the Group’s businesses as a place to shop. management is based on setting behavioural
Conduct risk is the risk of inappropriate, unethical or expectations through its Code of Conduct,
unlawful behaviour on the part of an organisation’s explicit culture commitments, strong
management or employees and can be caused by leadership, and an organisational governance
deliberate actions or may be inadvertent, because of framework that monitors, measures and
inadequacies in an organisation’s practices, frameworks reports upon inappropriate behaviours.
or education programs.
Outlook
Given continuing COVID-19 uncertainties the Board cannot provide FY2022 guidance at this time. COVID-19 continues to remind
Australians of the importance of a comfortable home (and home office) and motivates strong spend in home improvement
and home decoration. We expect this behaviour to persist whilst COVID-19 remains a threat in our communities albeit the
frequency, duration and extent of Government imposed store closures due to COVID-19 will also be a significant contributor to
the FY2022 result.
Adairs expects to open 2-4 net new stores and upsize 8-10 existing stores across Australia/New Zealand in FY2022.
Significant changes in the state of affairs

There have been no significant changes in the state of affairs of the Group during the 52 weeks ended 27 June 2021.
20 ADAIRS LIMITED
Matters subsequent to the end of the financial year
Subsequent to 27 June 2021, the Group’s Adairs store portfolio has been impacted by various Government imposed restrictions
related to COVID-19. This has resulted in temporary store closures however majority of the impacted stores continue to offer
Call & Collect and Call & Deliver services with processes and protocols in place to support the safety and wellbeing of our team
and customers.
In July 2021, the Group renegotiated the maturity date of its existing finance facilities to be extended by four months. The finance
facilities are now due to expire on 31 July 2023 which better reflects the reporting cycle of the Group. There were no further
material changes to the finance facilities.
On 19 August 2021, the directors of Adairs Limited declared a final dividend on ordinary shares in respect of the 2021 financial
year. The total amount of the dividend is $16.9 million which represents a fully franked final dividend of 10.0 cents per share.
The dividend has not been provided for in the 27 June 2021 financial statements.
Other than the matter noted above, no matters or circumstances have arisen since the reporting date which significantly affected
or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group.
Environmental regulation
The Group’s operations are not subject to any significant environmental obligations or regulations. No environmental breaches
have been notified to the Group during the 52 weeks ended 27 June 2021.
Directors and Directors’ Interests

The Directors of Adairs Limited in office at 27 June 2021 are listed below together with details of their relevant interests in the
securities of the Company at this date.
Brett Chenoweth
Independent Chair, Non-Executive
Brett was appointed Independent Chair in November 2020 and brings a wealth of major international
experience across media, technology, entertainment, investment and telecommunications. Previously
Brett was the Chief Executive Officer and Managing Director of APN News and Media, and Head of
Group Strategy and Mergers & Acquisitions at Telecom New Zealand. Brett holds a number of unlisted
directorships including Vodafone New Zealand, Canberra Data Centres and Madman Entertainment.
Special Responsibilities Interest in Adairs Limited shares and options
Chair of the Board Nil
Chair of the Nomination Committee Other Current Listed Directorships
Member of the Audit and Risk Committee Janison Education Group (since July 2014)
Member of the Remuneration Committee
Former Listed Directorships in the last 3 years
None
Mark Ronan
Managing Director and Chief Executive Officer
Mark was appointed Chief Executive Officer and Managing Director in November 2016, following roles
at Adairs in Finance, Merchandise Planning, Store Operations and as Chief Operating Officer. Mark
is a Chartered Accountant with prior experience in operating businesses, funds management and
accounting.
Special Responsibilities Other Current Listed Directorships
Managing Director and Chief Executive Officer None
Interest in Adairs Limited shares and options Former Listed Directorships in the last 3 years
681,668 ordinary shares None
3,118,379 options

Directors’ Report
Kate Spargo
Independent Non-Executive Director
Kate has broad commercial and organisational experience, as well as a focus on risk, audit and
governance, supported by her legal background in both government law and private practice. Kate has
been an independent company director for 20 years, covering listed and unlisted companies in a variety
of sectors including infrastructure, construction and engineering, energy, financial services, building
product manufacture and distribution, and health services. In addition to her listed roles Kate is a
Non-executive director of the Geelong Football Club.
Chair of the Audit and Risk Committee Non-executive director of Sonic Healthcare Ltd
Member of the Remuneration Committee (since July 2010)
Member of the Nomination Committee Non-executive director of Sigma Healthcare Ltd
(since December 2015)
Interest in Adairs Limited shares and options
Non-executive director CIMIC Group Ltd
41,667 ordinary shares (since September 2017)
Non-executive director of Xenith IP Ltd
(April 2017 to August 2019)
Trent Peterson
Non-Executive Director
Trent has over 20 years of investment and private equity experience, focused primarily on businesses
operating in consumer, retail and media sectors. Trent is Managing Director of Catalyst Investment
Managers and the founder and Managing Director of Catalyst Direct Capital Management. Trent was
non-executive Chairman of Adairs from 2010 until the IPO in 2015, being the period of Catalyst’s
majority ownership. Trent is also a non-executive director of a number of unlisted companies including
Cirrus Media Pty Ltd and Australian Pure Health Pty Ltd (trading as Mr Vitamins).
Chair of the Remuneration Committee Non-executive director of Dusk Group Limited
Member of the Audit and Risk Committee (since February 2015)
Member of the Nomination Committee Non-executive director of Universal Store Holdings
Limited (since October 2018)
Non-executive director of The Shaver Shop Group
1,405,334 ordinary shares Limited (since May 2016)
None
Kiera Grant
Kiera has extensive board and senior management experience, having spent 15 years working in
investment banking. Kiera has extensive financial and strategic assessment knowledge combined with
mergers and acquisitions, capital market and corporate governance experience. Kiera is Chair and
Trustee of the Art Gallery of New South Wales Foundation and holds a number of unlisted non-executive
directorships including Samuel Smith and Sons Pty Ltd (incorporating Yalumba Wine Co and Negociants
Fine Wine Distributors).
Member of the Remuneration Committee Non-Executive Director of Future Generation Global
Member of the Nomination Committee Investment Company Ltd (since March 2018)
170,427 ordinary shares None
22 ADAIRS LIMITED
Simon West
Simon is currently CEO of Torpedo7, an adventure sport retailer, and previously held CEO roles at
clothing retailer Max Fashions, EziBuy and the Australian ecommerce website DealsDirect.com.au.
Simon is a non-executive director of online fashion retailer Onceit Limited and also provides advisory
services to retail businesses in the direct-to-consumer space. Simon is based in Auckland, New Zealand.
Member of the Audit and Risk Committee None
Member of the Nomination Committee Former Listed Directorships in the last 3 years
Interest in Adairs Limited shares and options Non-Executive Director of Trademe Group Limited
Nil (November 2016 to May 2019)
David MacLean
Non-Executive Director
David was the Chief Executive Officer and Managing Director of Adairs for 14 years from 2002-2016,
having previously held the role of General Manager from 1989-2002. David now runs his family
investment office and holds minority interests in a number of private retail businesses.
Member of the Nomination Committee Non-executive director of Dusk Group Limited
Member of Remuneration Committee (since November 2015)
Non-executive director Universal Store Holdings
Limited (since October 2019)
2,993,486 ordinary shares
None
Michael Cherubino
Executive Director Property and Business Development

Michael has over 24 years’ experience in the retail sector, including as CFO of Adairs immediately prior
to his current role. Prior to Adairs Michael held roles with National Australia Bank and Bankwest.
Member of the Nomination Committee None
2,117,209 ordinary shares None
1,525,000 options

Directors’ Report
Company Secretary
Fay Hatzis is the Company Secretary.
Meetings of Directors
The following table sets out the number of meetings of the Company’s Board of Directors and each Board Committee held during
the 2021 financial year and the number of meetings attended by the members of the Board or the relevant Committee.
Meetings of Committees
Board Audit Nomination Remuneration
Director Held Attended Held Attended Held Attended Held Attended
M Butler 5 5 3 3 — — 1 1
B Chenoweth 10 10 2 2 — — 1 1
D MacLean 16 15 — — 2 2 2 2
T Peterson 16 16 5 5 2 2 2 2
M Cherubino 16 16 — — 2 2 — —
K Spargo 16 16 5 5 2 2 2 2
M Ronan 16 16 — — 2 2 — —
K Grant 16 16 — — 2 2 2 2
S West 16 15 5 5 2 2 — —
Held: Number of meetings held while a Director was a member of the Board or Committee.
Attended: Number of meetings attended.
Non-Audit Services
The Group may decide to engage the auditor on assignments additional to their statutory audit duties where the auditors’
expertise and experience with the Group are important.
Details of the amount paid to the auditor Ernst & Young Australia for audit and non-audit services provided during the year are set
out in Note 28 of the financial statements.
The Directors are satisfied that the provision of non-audit services is compatible with the general standards of independence for
auditors imposed by the Corporations Act 2001. The Directors are satisfied that the services provided did not compromise the
external auditor independence for the following reasons:
› all non-audit services are reviewed and approved by the Audit and Risk Committee prior to commencement to ensure that
they do not impact the integrity and objectivity of the auditor; and
› the nature of the services provided does not compromise the general principles relating to auditor independence as set out
in APES110 – Code of Ethics for Professional Accountants.
Auditors Independence Declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out
on page 42.
Proceedings on behalf of the Company

There are currently no proceedings on behalf of the Group.
24 ADAIRS LIMITED
Indemnification and insurance of officers
The Company has agreed to indemnify all the directors and executive officers against loss, cost, damage, expense or other liability
suffered or incurred by the directors as officers of the Company. The indemnity does not extend to indemnify the Director:
a. in bringing or prosecuting any claim, unless the claim is a claim in the nature of a cross-claim or third-party claim for
contribution or indemnity in, and results directly from, any proceedings in respect of which the directors have made a claim
under the indemnity;
b. in connection with any proceedings between the directors and the director’s appointee or any related body corporate of the
appointer (within the meaning of section 50 of the Corporations Act 2001) or their respective insurers; or
c. to the extent that the amount of the claim under the indemnity is increased as a result of failure of the director to comply with
their obligations under the indemnity agreement.
During or since the financial year, the Company has paid premiums in respect of a contract insuring all the directors of Adairs
Limited against legal costs incurred in defending proceedings for conduct other than:
a. A wilful breach of duty
b. A contravention of sections 182 or 183 of the Corporations Act 2001, as permitted by section 199B of the Corporations Act 2001
Under the terms of the policy, the total amount of insurance contract premiums paid cannot be disclosed.
Indemnification of Auditors
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young Australia, as part of the terms of
its audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment
has been made to indemnify Ernst & Young during or since the financial year.
Rounding
The amounts contained in the financial report have been rounded to the nearest $1,000 (when rounding is applicable) where noted
($000) under the option available to the Company under ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument
2016/191. The Company is an entity to which this legislative instrument applies.

REMUNERATION REPORT
(AUDITED)
The Directors of Adairs Limited present the Remuneration Report for the Group for the 52 week period from 29 June 2020
to 27 June 2021. This Remuneration Report forms part of the Directors’ Report and has been audited in accordance with the
Corporations Act 2001.
This Remuneration Report sets out the remuneration arrangements for the Group’s key management personnel (KMP) (listed in
the table below) who have been KMP during the reporting period. Throughout this Remuneration Report, the KMP are referred to
as either Non-executive Directors or Senior Executives (being Executive Directors and Other KMP).
All Non-executive Directors and Senior Executives have held their positions for the entire duration of the reporting period unless
indicated otherwise.
Name Position
Non-executive Directors
Brett Chenoweth Independent, Non-executive Chair (appointed 16 November 2020)
Kate Spargo Independent, Non-executive Director
Simon West Independent, Non-executive Director
Kiera Grant Independent, Non-executive Director
Trent Peterson Independent, Non-executive Director (full year) and
Interim Chair (27 October 2020 – 15 November 2020)
David MacLean Non-executive Director
Michael Butler Independent, Non-executive Chair (retired 26 October 2020)
Executive Directors
Mark Ronan Chief Executive Officer (CEO) and Managing Director
Michael Cherubino Executive Director Property and Business Development
Other Key Management Personnel
Ashley Gardner Chief Financial Officer (CFO)
Contents
Section 1 Remuneration Overview page 27

Section 2 Remuneration Strategy and Policy page 28
Section 3 Role of the Remuneration Committee and external advisers page 28
Section 4 Company Performance – relationship between financial performance and remuneration page 29
Section 5 Senior Executive Remuneration Structure page 29
Section 6 Non-Executive Directors Remuneration Structure page 36
Section 7 KMP Disclosures page 36
Section 8 Details of Remuneration page 37
26 ADAIRS LIMITED
SECTION 1: REMUNERATION OVERVIEW
The Board continues to focus on building and delivering value to shareholders, progressing its growth plans and selectively
pursuing opportunities which are expected to add value having regard to the appropriate associated risks. Having a robust
remuneration and reward framework that supports and encourages sustainable growth, risk management, and retains our people,
is critical to the successful execution of our strategy.
The remuneration outcomes outlined in this Remuneration Report reflect the Group’s approach to rewarding Non-executive
Directors and Senior Executives for delivering strong performance and holding executive team members accountable to ensure
value for shareholders.
For the purpose of this report, Key Management Personnel (KMP) include all Non-Executive Directors of the Board as well as
Mark Ronan (Managing Director and Chief Executive Officer), Michael Cherubino (Executive Director Property and Business
Development) and Ashley Gardner (Chief Financial Officer).
While FY2021 continued to be impacted by COVID-19 the group delivered another record year with revenue up 28.5%
to $499.8 million. On a like-for-like basis sales increased by 16.5%, driven by the continued successful execution of our
underlying strategies.
The Group’s omni-channel strategy continued to progress strongly during the year, delivering sales growth across the Group. Group
online sales grew by 50.6% to $187.0 million and now represent 37.4% of total sales (up from 34.8% on a directly comparable
basis after annualising Mocka’s prior year contribution). Both Adairs and Mocka delivered strong online sales growth of 32.5% and
30.9% respectively. Adairs store sales were up 18.1% for the year as the business cycled the Government mandated nation-wide
store closures in Q4 FY2020. However, even after adjusting for closures in both years, store like-for-like sales were up 7.4% and up
by 12.6% over the pre-COVID levels achieved in FY2019.
Group Underlying EBIT1 of $109.1 million was up 97.3% on FY20. This was achieved through strong like-for-like sales growth across
all channels, continued gains in gross margin (up 410bps to 64.8% and disciplined cost control supporting significant operating
leverage with CODB as a percentage of sales falling from 40.9% to 36.7%.
In terms of major projects, the new National Distribution Centre remains on track to be operational by the end of Q1 FY2022 and
will deliver further improvements in both customer experience and operating efficiencies. Given the scale of this project and the
ongoing disruptions caused by COVID-19 throughout this project this is an excellent outcome.
Finally, as advised with the 1H FY2021 results, the Board determined that based on the performance of the Company it was
appropriate to repay the net JobKeeper wage subsidy benefit of $6.1 million received during FY2021 to the Australian Government.
This was repaid and recognised in the Group’s financial results in 2H FY2021 and is therefore excluded from all the relevant results
in the Remuneration Report.
FY2021 Remuneration
Remuneration packages: To remain competitive in attracting and retaining key talent during the 2021 financial year the Board
considered the remuneration levels for Senior Executives with reference to external market benchmarks. As a result of this review,
the Board increased Senior Executives’ fixed remuneration by up to 8%. There were no significant changes made to the remuneration
packages of the Senior Executives in relation to their short-term or long-term incentive, except for the Executive Director of
Property and Business Development, whose short-term incentive was increased by 25% on the prior year to align this with other
Senior Executives and in recognition of the importance of managing the Group’s lease portfolio through the COVID-19 period.
Short-term incentive: The Group’s short-term incentive (“STI”) plan rewards performance against financial measures. For the
FY2021 all the financial and operational targets were achieved and as a result, the short-term incentive entitlements are payable to
the Senior Executives. In assessing FY2021 financial performance, the following were specifically excluded:
i. JobKeeper wage subsidy benefit received in 1H FY2021 and returned to Government in 2H FY2021;
ii. Costs associated with the transition to the new National Distribution Centre;
iii. Mocka related acquisition costs (including earn-out related adjustments); and
iv. Impact of AASB 16 Leases.
1. Underlying EBIT excludes the impact of (i) AASB 16 Leases, (ii) costs associated with the transition to the new National Distribution Centre, (iii) Mocka related acquisition costs
(including earn-out related adjustments), and (iv) the net JobKeeper wage subsidy benefit received and returned to Government.

Remuneration Report (Audited)
Long-term incentive: Long-term incentives (“LTI”) issued to Senior Executives in FY2021 are in the form of share options.
Each share option entitles the executive to acquire an ordinary share in the Company subject to the share options vesting after
meeting specific performance and service conditions and payment of an exercise price. Details of the share options for the
Senior Executives are included in Section 8 of the Remuneration Report.
As part of his remuneration package, the Group provided an interest free, non-recourse loan to Ashley Gardner in FY2020.
Details of this arrangement are included in Section 7 of this report.
Fees for Non-Executive Directors: During FY2021 there were no changes to the remuneration of non-executive directors,
following a review that was implemented in FY2019. The Board believes the current levels of remuneration are fair and appropriate
and reflect the alignment between shareholders’ interests and the Group’s remuneration policies and practices.
SECTION 2: REMUNERATION STRATEGY AND POLICY

A core belief of the Board is that the attraction, engagement and retention of skilled and culturally aligned leaders and team
members provides a competitive advantage which is fundamental to the long-term success of the Group. The maintenance and
development of these leaders and fostering a workplace culture that supports this belief are priorities for the Group.
The Group is committed to creating a focused and high performance culture which encompasses our philosophy to provide
competitive market based total remuneration arrangements. The Group’s remuneration approach is linked in material part to
measures of financial performance that best represent the outcomes relevant to the value creation strategy of the Group.
Remuneration can include a number of different elements such as fixed remuneration, superannuation, Short-term incentives,
Long-term incentives and other benefits such as loans to acquire shares in the company, tools of trade, study and relocation
assistance and car lease arrangements. The elements of the total remuneration package may vary according to the job role, team
members experience and performance. The Remuneration Committee also has regard for the equity ownership position of the
KMPs when setting remuneration packages.
In considering the remuneration arrangements of KMPs, the Remuneration Committee makes recommendations based on
7 important concepts:
1. Simplicity: Seek to ensure remuneration arrangements are easily understood by both the KMP and other key stakeholders.
2. Alignment: Seek to ensure material components of the KMP’s remuneration arrangements (including their shareholding as
appropriate) contribute to alignment of the interests of the KMP with those of the shareholders.
3. Sustainability: Seek to ensure the material aspects of a KMP’s remuneration arrangements are sustainable and could
withstand tests of precedent and transparency within the organisation and market place.
4. Competitive: Seek to ensure KMP’s are remunerated such that (when taken as a whole, and having regard to their particular
circumstances, including any risks and opportunities) their individual remuneration arrangements are competitive with relevant
comparable positions.
5. Risk aware: In considering remuneration arrangements, the Group seeks to manage certain key risk exposures, including the
risk of loss of an individual, retention of intellectual property and skills, issues associated with replacement of the individuals,
risk of poaching, and the presence and quality of succession planning.
6. Company first: The Group develops systems, policies and processes to ensure it manages its reliance on any given individual
within its leadership team (which includes the KMP). This extends to remuneration, where it seeks to ensure the remuneration
architecture and individual arrangements are orderly and appropriate in the relevant circumstances. Finally, the Group seeks to
respond to changes in market conditions in a measured and sustainable manner.
7. Reward for outcomes and performance: The Group seeks to identify the outcomes that drive sustainable value creation (or
value protection) and seek to reward executives who influence those outcomes most significantly and directly.
SECTION 3: ROLE OF THE REMUNERATION COMMITTEE AND EXTERNAL ADVISERS

The primary objective of the Remuneration Committee is to assist the Board to fulfil its corporate governance and oversight
responsibilities in relation to the Group’s people strategy including remuneration components, performance measurements and
accountability frameworks, recruitment, engagement, retention, talent management and succession planning.
The Remuneration Committee also works with the CEO in considering specific situations pertaining to employment terms for
individuals, or groups of individuals as needed.
The Remuneration Committee undertakes an annual review of the Group’s remuneration strategy and remuneration policy to
facilitate an understanding of the overall approach to remuneration and to confirm alignment with the Group’s strategy, high
standards of governance and compliance with regulatory standards.
28 ADAIRS LIMITED
The Remuneration Committee reviews and recommends to the Board for approval, remuneration arrangements for the CEO
and other Senior Executives. The Remuneration Committee also establishes the policy for the remuneration arrangements for
non-executive directors. The Remuneration Committee reviews KMP arrangements on an annual basis against the remuneration
policy, external remuneration practices, market expectations and regulatory standards. The Remuneration Committee also
reviews relevant individual’s remuneration arrangements in the event that significant circumstances change (e.g. a role or
company restructure or change of role). The Remuneration Committee obtains independent external remuneration advice
where appropriate.
The Remuneration Committee exercises caution in interpreting remuneration surveys. While it seeks independent data from time
to time, benchmarking of salaries requires an intimate knowledge of the details, role and circumstances of the components of
the reference data set, and this is rarely possible, is complex and prone to error. Such information is therefore regarded as only
one component of the balanced consideration of base salaries and other remuneration terms and as a result the Remuneration
Committee does not have a stated position regarding a target benchmark. Market information is sourced from internal and
external sources.
No remuneration consultants or external advisors provided a remuneration recommendation during the 52 weeks ended
27 June 2021.
SECTION 4: C
OMPANY PERFORMANCE — RELATIONSHIP BETWEEN FINANCIAL
PERFORMANCE AND REMUNERATION
Remuneration for Senior Executives is directly linked to the performance of the Group.
The FY2021 Short-term incentive (STI) scheme for Senior Executives is based on achieving pre-determined performance criteria
and targets. The primary performance condition is the Underlying EBIT of the business. The FY2021 Long-term incentive (LTI)
plan offered Senior Executives share options over the ordinary shares of Adairs Limited. The share options were issued for nil
consideration and are subject to the satisfaction of both performance and service conditions. Key details of the LTI plan are
summarised in Section 5. Shareholder approval for the FY2021 LTI scheme for the issue of share options to Directors of the
Company was obtained at the Annual General Meeting on 26 October 2020.
The following table shows the Group’s financial performance for FY2017 to FY2021.
FY2021 FY20201 FY2019 FY20182 FY20172

Continuing Operations Performance Performance Performance Performance Performance
Sales ($’000) $499,762 $388,933 $344,430 $314,769 $264,964

Like for like sales (%) +16.5% +12.6% +7.2% +14.3% —1.4%
EBIT ($’000) 1
$102,716 $59,041 $43,446 $45,261 $30,812
Net profit before tax ($’000) $95,290 $52,791 $42,286 $43,816 $28,921
Net profit after tax ($’000) $63,742 $35,281 $29,643 $30,561 $21,017
Share price at end of year $4.20 $2.25 $1.42 $2.23 $0.86
Dividends paid per shares 23.0 cents 11.0 cents 14.5 cents 13.5 cents 8.0 cents
Earnings per share 38 cents 21 cents 18 cents 18 cents 13 cents
1. FY2020 performance includes Mocka for 30 weeks and the adoption of AASB 16 Leases for the first time (refer to Note 2.3(i)(a) of the FY2020 consolidated financial statements).
EBIT is therefore not comparable to prior periods. Like for like sales excludes Mocka.
2. Due to adoption of AASB 15 in FY2019, the prior periods are not comparative.
SECTION 5: SENIOR EXECUTIVE REMUNERATION STRUCTURE

Senior Executives are remunerated under a total reward structure which currently consists of three elements:
› fixed remuneration comprising base salary package (inclusive of superannuation contributions, car allowances and
other benefits);
› short-term incentives (STI); and
› long-term incentives (LTI).
The mix of remuneration between fixed and variable (i.e. at risk) components for a Senior Executive is determined having regard
to the seniority of the role, the responsibilities of the role for driving business performance and responsibilities for developing and
implementing business strategy.

The mix of fixed remuneration, STI and LTI elements as a percentage of total target remuneration for FY2021 was as follows:
Figure 1: Percentage mix of remuneration elements for Senior Executives for FY2021
% of total target remuneration for FY2021
At risk At risk At risk

remuneration remuneration remuneration
Fixed STI maximum LTI – FY2021 LTI – Prior Year
Senior Executive remuneration opportunity Tranche1 Tranches2
Mark Ronan 36% 33% 3% 27%

Michael Cherubino 43% 30% 3% 25%
Ashley Gardner 47% 42% 4% 7%
1. LTI Options are eligible to vest on 30 June 2024, subject to service and performance conditions.
2. Share-based payment expense recorded in FY21 with respect to previously issued tranches. The costs include a review of the assumptions in relation to the probability of achieving
performance targets and service conditions.
Fixed remuneration
The remuneration for Senior Executives includes a fixed component comprised of base salary and employer superannuation
contributions that are in line with statutory obligations.
The remuneration policy provides Senior Executives a base salary package that reflects the base salary for a comparable role in
similarly sized companies operating in the retail industry, having regard to the experience and expertise of the Senior Executive,
their performance and history with the Group, and other relevant factors. Senior Executives and the Board acknowledge that this
requires both quantitative and subjective assessment.
Fixed remuneration is reviewed annually by the Remuneration Committee and recommendations are made to the Board. Any
change is usually effective from the commencement of the new financial year. There is no guaranteed salary increase in any Senior
Executive’s service contract.
Short-term incentives (STIs)

The Group’s STI scheme aligns Senior Executive reward with the achievement of performance targets that are aligned to delivering
and protecting sustainable value to shareholders. Senior Executives are eligible to participate in an annual STI based on the
achievement of annual performance conditions.
The amount of any STI paid in a year is firstly dependent upon a minimum level of EBIT being achieved by Adairs (EBIT
benchmark). If the EBIT benchmark is not achieved no STI is payable to any Senior Executive. If the EBIT benchmark is met the
amount of STI paid to each Senior Executive is set having regard to individual contribution and continuing service conditions as
set out below:
Condition Explanation
Performance conditions:
The level of Group EBIT achieved At the beginning of each year the Board determines a set of tiered EBIT targets for the
for the financial year forthcoming year with reference to the annual forecast and prior year results.
The Remuneration Committee has the ability to subsequently adjust EBIT targets for any
significant changes including, but not limited to, variances in the number of stores compared to
budget; or other event(s) which were not contemplated by the budget which require a significant
change in capital structure, including but not limited to a material acquisition or divestment, or
other event which requires a significant capital raising (equity or debt).
Individual contribution The Remuneration Committee’s assessment of the Senior Executive’s value adding performance
as measured by the achievement of their individual KPIs.
Continuing service conditions On the STI payment date (anticipated to be in September each year), the Senior Executive
must be employed by the Group (and not have given notice or be suspended from employment)
otherwise no STI will be paid, subject to the Board’s discretion.
Following the end of the financial year, the Remuneration Committee assesses achievement against performance conditions, and
determines the STI awards to be made to each Senior Executive (if any).
30 ADAIRS LIMITED
STI targets and outcomes for FY2021
For FY2021 the Board set the EBIT benchmark at $67.25 million, being c.20% above the prior year’s Underlying EBIT
($55.3 million). In addition, following strong performance of the Group in 1H FY2021, the Board introduced additional levels to
encourage and reward management for maximising the FY2021 result for shareholders. However, the Board determined that any
additional incentive payable would be deferred for 12 months and subject to the individual remaining employed by Adairs at that
time. The table below summarises the tiers and participation levels for each scheme in FY2021:
FY2021 EBIT Potential

benchmark Incentive as a
v FY2020 % of Maximum
FY2021 EBIT Underlying Potential
Tier benchmark EBIT Incentive
Level 1 $67.25m +21.6% 15%

Level 2 $68.65m +24.10% 30%
Level 3 $70.05m +26.7% 50%
Level 4 $71.45m +29.2% 75%
Level 5 $72.85m +31.7% 100%
Additional Level 1 $95.00m +71.8% 115%
Additional Level 2 $100.00m+ +80.8% 130%
If the FY2021 EBIT was less than $67.25m no incentive would be payable to any Adairs Senior Executive, regardless of whether
they achieved their individual KPIs.
If the FY2021 EBIT met or exceeded the relevant EBIT benchmark level, the Senior Executive is entitled to 50% of their maximum
potential incentive with the balance of 50% being equally dependent upon the achievement of their two individual KPIs (25% each).
As detailed above the Additional Levels were created after the highly successful first half and enabled the Senior Executives
to achieve up to an additional 30% of their maximum potential incentive based on the FY2021 EBIT exceeding $95.0 million.
Additional levels have not been provided in prior years, however the Board felt that by rewarding management for maximising the
FY2021 result and then deferring payment for 12 months encouraged retention of our strong management team.
Senior Executives were advised that for the purposes of determining if the EBIT benchmark had been met, the FY2021 EBIT
calculation would be adjusted for the following items (“STI adjustments”):
› the net benefit of the JobKeeper wage subsidy received would be excluded;
› Transition costs in relation to the closure and relocation of the existing Distribution Centres to the new National Distribution
Centre would be excluded;
› costs associated with the acquisition of Mocka would be excluded; and
› any abnormal items (revenue or expense) as determined by the Board would be excluded.
In FY2021, the Remuneration Committee reviewed the performance of the business and the Senior Adairs Executives against their
KPIs for the 52 week period from 29 June 2020 to 27 June 2021. The results of this review were as follows:
Proportion of Proportion of
target STI target STI
Mark Ronan Condition met (%) ($)
EBIT benchmark Yes (Level 5) 50% $225,000

KPI 1: Group like-for-like sales > 3.0% Yes 25% $112,500
KPI 2: Group average stockturn not to be below 3.5x Yes 25% $112,500
Short-Term Incentive Achieved 100% $450,000
Additional Levels: EBIT benchmark Yes 30% $135,000
130% $585,000

Michael Cherubino Condition met (%) ($)

KPI 1: Store occupancy costs as a % of Sales not to exceed Budget Yes 25% $62,500
KPI 2: Aggregate annualised savings of net rent change on all lease Yes 25% $62,500
renewals agreed and rental rebates earned of $500k or more
130% $325,000
Ashley Gardner Condition met (%) ($)

KPI 1: CODB as a % of Sales not to exceed Budget Yes 25% $87,500
KPI 2: Group average stockturn not to be below 3.5x Yes 25% $87,500
130% $455,000
Figure 2: Percentage of FY2021 STI paid and forfeited for Senior Executives
Given the above assessment the following STIs were awarded:
Actual STI
Target STI Actual STI awarded as % % of maximum Deferred STI % of maximum
(Base) awarded of maximum STI award award1 STI award
Senior Executives ($) ($) STI forfeited ($) deferred
Mark Ronan $450,000 $585,000 130% 0% 135,000 30%

Michael Cherubino $250,000 $325,000 130% 0% 75,000 30%
Ashley Gardner $350,000 $455,000 130% 0% 105,000 30%
1. The Deferred STI is amortised over the service period.
STI arrangements for FY2022

Set out in Figure 3 (below) is the maximum STI opportunity for each Senior Executive for FY2022. The maximum STI opportunity
for Mark Ronan and Ashley Gardner as a percentage of fixed remuneration is 70% in line with the market for equivalent roles.
The maximum STI opportunity for Michael Cherubino is $300,000 (61% of fixed remuneration).
The FY2022 STI will be based on similar performance and service conditions as the FY2021 STI (as set out above). The Board has
reviewed and reset the EBIT targets for FY2022. Details of the FY2022 STI and any amount awarded to Senior Executives will be
disclosed in the FY2022 Remuneration Report.
32 ADAIRS LIMITED
Figure 3: FY2022 remuneration opportunities
Fixed % of fixed
remuneration Maximum STI remuneration
(at 30 June opportunity for available as
Senior Executive 2022) FY20221 base STI
Mark Ronan $730,000 $511,000 70.0%

Michael Cherubino $490,000 $300,000 61.2%
Ashley Gardner $550,000 $385,000 70.0%
1. This is based on the maximum STI opportunity. The actual reward is dependent on the achievement of performance conditions in FY2022. The board also reserves the right to pay
participants a discretionary amount where they believe circumstances demand, though this discretion is exercised sparingly.
Long-term incentives (LTIs)

The LTI plan has been offered to Senior Executives since FY2017. The plan assists in the motivation, retention and reward of
Senior Executives. The Board believe that equity ownership is an important component of aligning the interests of KMPs with
shareholders and focusing performance on the achievement of long-term metrics including sustainable shareholder value creation
(and value protection) over time. The Board continues to reassess the plan and its structure to best support and facilitate the long-
term growth in shareholder value. There has been no material change to the structure of the LTI plan from last year.
LTIs issued to executives are in the form of share options. Each share option entitles the executive to acquire an ordinary share in
the Company subject to meeting specific performance and service conditions and payment of an exercise price (LTI Options).
LTI vesting and grants for FY2021

In FY2021 the LTI vesting outcomes for KMPs were as follows:
Proportion of % of LTI
target LTI Options that
LTI Plan / Vesting date Condition met (%) vested
Mark Ronan
EPS performance condition FY2017 / 30 June 2020 No 60% 0%
(4 July 2016 to 30 June 2019)
Sales performance condition FY2017 / 30 June 2020 Yes 40% 39.7%
(4 July 2016 to 30 June 2019)
Service condition 30 June 2020 Yes
Michael Cherubino
EPS performance condition FY2017 / 30 June 2020 No 60% 0%
(4 July 2016 to 30 June 2019)
Sales performance condition FY2017 / 30 June 2020 Yes 40% 39.7%
(4 July 2016 to 30 June 2019)
Service condition 30 June 2020 Yes
Details of the number of LTI Options exercised and lapsed during FY2021 are detailed in Section 8 of this report.
On 26 October 2020, Mark Ronan, Michael Cherubino and Ashley Gardner received grants of LTI Options as their FY2021 LTI award.
Each LTI Option entitles the Senior Executive to acquire an ordinary share in the Company subject to meeting specific performance
and service conditions (set out below) and payment of an exercise price. The LTI Options were granted at no cost to the Senior
Executives as they form part of the Senior Executive’s remuneration for FY2021.
The performance period is 3 financial years from 29 June 2020 to 25 June 2023 . In addition to the performance condition, there
is also a service condition which must be satisfied ending on 30 June 2024. The LTI Options will vest and become exercisable if
the relevant performance and service conditions have been met. The Senior Executive may then exercise any vested LTI Options
from 1 July 2024, being 3.7 years from the LTI Options grant date. The FY2021 share options have a six year expiry period (until
26 October 2026). After 26 October 2026, any unexercised LTI Options will lapse. On vesting, an exercise price of $4.04 per share
option will be payable by the Senior Executive to receive their share allocation. The exercise price per share option was calculated
as the volume weighted average price (VWAP) of Adairs shares over the five trading days immediately prior to the date of the
2020 Annual General Meeting, rounded up to the nearest whole cent per share, plus 5 cents. LTI Options do not carry any voting or
dividend entitlements prior to exercise.

Performance conditions
The LTI Options are subject to two performance conditions:
› EPS performance condition – 60% of the LTI Options are subject to an earnings per share (EPS) performance condition. This is
based on the compound annual growth rate (CAGR) of the Company’s EPS over a 3 year period ending 2 July 2023.
The percentage of LTI Options that vest against the EPS performance condition will be determined in accordance with the
following vesting schedule:
EPS CAGR for performance period % of EPS LTI Options vest
Less than or equal to 5% 0%

Between 5% and 15% pro-rata between 0% and 100%
Equal to, or greater than, 15% 100%
The EPS performance condition was selected because of its expected correlation with Long-term shareholder return and its lower
susceptibility to short-term share price volatility which is beyond the control of KMP in many circumstances. This measure also
provides a greater ‘line of sight’ between Senior Executives’ actions and outcomes, and the way in which their performance is
measured. Consequently, this component was more heavily weighted in order to drive performance and provide an appropriate
retention incentive.
For the purpose of testing the achievement of the EPS performance condition, financial results are extracted by reference to the
Group’s audited financial statements adjusted for any abnormal items (revenue or expense) as determined by the Board. The use of
audited financial statements ensures the integrity of the measure and alignment with the true financial performance of the Group.
Assessment of achievement of the EPS performance condition will be determined by the Board. Any material changes to
accounting standards during the measurement period will be considered by the company to ensure the measurement is consistent
and fair over the testing period.
› Sales performance condition — 40% of the LTI Options are subject to a total sales growth performance condition. This is based
on the compound annual sales growth of the Company over a 3 year period ending 25 June 2023.
The percentage of LTI Options that vest against the Sales performance condition will be determined in accordance with the
following vesting schedule:
Total sales growth for performance period % of sales growth LTI Options that vest
Less than or equal to 7.5% 0%

Between 7.5% and 15.0% pro-rata between 0% and 100%
Equal to, or greater than, 15.0% 100%
The sales performance condition will be measured by reference to the Company’s total sales growth over 29 June 2020 to
25 June 2023. Total sales growth measures the total sales generated from the group in a relevant period compared to the total
aggregated sales in the relevant corresponding period and after adjusting for any acquisitions or divestments made across the
period. For purposes of the calculation the sales result will be the compounded annual growth rate achieved over the period.
Prior to FY2021 the sales performance condition was based upon like-for-like sales performance. The addition of other brands
to the group, the omni-channel approach of the Group and the impact of COVID-19 (resulting in ongoing periods of store closures)
has resulted in like-for-like sales becoming more difficult to objectively calculate and a less reliable measure of performance and
brand health.
Total sales growth replaced the like-for-like sales performance measure as the Board believe it is an objective measure of the Long-
term health of the company’s customer proposition, and is consistent with the Group’s omni-channel strategy to enable customers
to shop how they choose.
34 ADAIRS LIMITED
Service condition
The LTI Options are also subject to a service condition where participants must remain employed on a full-time basis by, and must
not have given notice of resignation from, the Group at the vesting date (being 30 June 2024).
Treatment on cessation of employment

Where a Senior Executive ceases employment for cause or due to resignation, all unvested LTI Options lapse. In certain
circumstances the Board may consider on cessation of employment, a pro rata portion (based on the portion of the performance
period that has elapsed) of a Senior Executive’s unvested LTI Options remaining on foot and subject to the original performance
conditions, as if the participant had not ceased employment.
However, pursuant to the Plan Rules, the Board retains absolute discretion to determine to vest or lapse some or all LTI Options in
all circumstances.
Treatment on change of control

In the event of a likely change in control of the Company, the Board has the discretion to determine that some or all of the
LTI Options will vest. If an actual change of control occurs before the Board exercises its discretion, a pro-rata portion of the
Options (equal to the portion of the relevant performance period that has elapsed up to the change of control) will vest. The
Board retains a discretion to determine whether the remaining unvested LTI Options will vest and become exercisable or lapse.
On a change of control, vested LTI Options will remain exercisable for a period of three months after the actual change of control
and will lapse after the end of that period (if not exercised).
Service Agreements
Adairs Holdings Australia Pty Ltd (ACN 128 275 838) (a wholly owned subsidiary of the Company) (Adairs Holdings) has entered
into service agreements with Mark Ronan, Michael Cherubino and Ashley Gardner to formalise the remuneration and terms of their
employment with Adairs. Each of these agreements provides for the provision of fixed remuneration, performance related cash
bonuses and other benefits.
The term of the service agreements with the Senior Executives are ongoing until terminated by either Adairs Holdings or the
relevant Senior Executive. The service agreements with the Senior Executives may be terminated early by either party with
six months’ notice. In either event, Adairs Holdings may make payment in lieu of notice. In the event of serious misconduct or
other circumstances warranting summary dismissal, Adairs Holdings may terminate the Senior Executive’s employment contract
immediately without notice.
The Corporations Act restricts the termination benefits that can be provided to KMP on cessation of their employment, unless
shareholder approval is obtained. The shareholders of the Company and Adairs Holdings approved termination arrangements for
Michael Cherubino at a general meeting of the Company on 1 June 2015.
After cessation of employment for any reason, for a period of 6 months, the Senior Executive must not compete with the Company
(including direct or indirect involvement as a principal, agent, partner, employee, shareholder, unit holder, director, trustee,
beneficiary, manager, contractor, adviser or financier), without first obtaining the consent of the Company in writing, subject to
certain carve outs and exemptions.
In addition, in the case of Mark Ronan, Michael Cherubino and Ashley Gardner, where the Senior Executive has resigned from the
Company, the Board may elect to extend this restraint period for a further period of up to 6 months by notifying the employee and
paying the employee a further amount for each month (up to a maximum of 6 months) on a monthly basis.
No contracted retirement benefits are in place with any of the Group’s Senior Executives.

SECTION 6: NON-EXECUTIVE DIRECTORS REMUNERATION STRUCTURE

Overview
The Company’s remuneration strategy is designed to attract and retain experienced, qualified non-executive directors and to
remunerate appropriately to reflect the demands which are made on them and the responsibilities of the position.
The level of fees are reviewed annually by the Remuneration Committee and are based on the fees paid for comparative non-
executive director roles in similarly sized publicly listed companies operating in the retail industry.
Non-executive Directors’ fees

Non-executive Director fees are determined within an aggregate Non-executive Directors’ fee pool approved by shareholders.
The current approved fee pool of up to $600,000 per annum was approved by shareholders at a general meeting of the Company
on 26 October 2018.
Currently, annual base Non-executive Directors’ fees (including superannuation where applicable) are $200,000 for the Chairman,
$90,000 for the Chairman of the Audit & Risk Committee and $80,000 for each other Non-executive Director. No additional fees
were paid to directors for their roles on the Nomination or Remuneration Committees.
Directors may also be reimbursed for travel and other expenses incurred in attending to the Company’s affairs. Directors may be
paid additional or special remuneration where a Director performs services outside the ordinary duties of a Non-executive Director.
There are no retirement benefit schemes for Non-executive Directors other than statutory superannuation contributions, and
Non‑executive Directors do not currently receive shares, performance rights or options as part of their remuneration.
SECTION 7: KMP DISCLOSURES

Material Contracts with the Company
No Director or other KMP (including their related parties) has entered into a material contract with the Company or a subsidiary
during the reporting period.
Loans with the Company

During FY2020, the Group provided an interest free, non-recourse loan amounting to $750,000 to Ashley Gardner to acquire
shares in the Company. Mr Gardner must use proceeds arising from the sale of the shares to repay any outstanding loan balance.
The loan must also be repaid if Mr Gardner ceases employment with the Group. As a condition of the loan, Mr Gardner was required
to invest a further $250,000 of personal funds to purchase shares in the Company totalling $1,000,000. A total of 572,300 shares
were purchased on-market by Mr Gardner at an average price of $1.75 per share. As part of this agreement, up to 55% of the loan
will be forgiven progressively between August 2022 until maturity in August 2027 as follows, subject to continued employment
with the Group:
Date Forgiveness Amount
14 August 2022 $93,750

14 August 2023 $93,750
14 August 2024 $56,250
14 August 2025 $56,250
14 August 2026 $56,250
14 August 2027 $56,250
The balance of the loan at maturity, amounting to $337,500, must be repaid on or before 14 August 2027. Repayment of the loan
may also be made in full by returning the purchased shares under the arrangement back to the Company at any time during the
term of the loan and at maturity.
The non-recourse nature of the loan and the potential loan forgiveness give rise to benefits to Mr Gardner that are considered
share-based payments. The share-based payment expense is measured at fair value at the grant date and recognised as an
expense when the arrangement is considered to vest, being immediately at the grant date. The vesting date is considered to be the
grant date due to the non-recourse nature of the arrangement allowing Mr Gardner to return the subject shares to the Company
in order to extinguish the loan during the term to maturity. The cost of this arrangement was recognised in full as a share-based
payment in FY2020 and there have been no further costs recognised by the Company in FY2021.
No Director or other KMP (including their related parties) has entered into a loan made, guaranteed or secured, directly or
indirectly, by the Group during the reporting period.
36 ADAIRS LIMITED
SECTION 8: DETAILS OF REMUNERATION
Details of the remuneration of the Directors and KMP of the Company for the current financial year are set out below.
52 weeks Other Termi- Share-

ended Short-term Post-employment long-term nation based
27 June 2021 employee benefits benefits benefits benefits payments Total
Short Long
-Term -Term
Cash Incentive Non- Incentive
salary Cash monetary Super- Share
In AUD and fees bonuses benefits annuation Other options
Non-Executive
Directors
Brett $125,000 — — — — — — — $125,000
Chenoweth1,3
Michael Butler2 $44,140 — — $4,193 — — — — $48,333
Trent Peterson 3
$80,000 — — — — — — — $80,000
Kate Spargo $82,192 — — $7,808 — — — — $90,000
David MacLean $62,600 — — $17,400 — — — — $80,000
Kiera Grant $73,059 — — $6,941 — — — — $80,000
Simon West $73,059 — — $6,941 — — — — $80,000
Total Non- $540,050 — — $43,283 — — — — $583,333
Executive
Directors
Executive
Directors
Mark Ronan $615,992 $489,706 — $21,668 — — — $545,455 $1,672,821
Michael $436,250 $272,059 — $25,000 — — — $292,399 $1,025,708
Cherubino
Other Senior
Executives
Ashley Gardner $478,750 $380,882 — $25,000 — — — $119,142 $1,003,774
Total $1,530,992 $1,142,647 — $71,668 — — — $956,996 $3,702,303
Executives
Total 2021 $2,071,042 $1,142,647 — $114,951 — — — $956,996 $4,285,636
1. Brett Chenoweth joined the Board as Independent, Non-executive Chair on 16 November 2020.
2. Michael Butler retired from the Board on 26 October 2020.
3. The Director fees for Trent Peterson and Brett Chenoweth for the period July 2020 to June 2021 were paid to them directly.


Details of the remuneration of the Directors and KMP of the Group for the previous financial year are set out below.
52 weeks Other Termi- Share

ended Short-term Post-employment long-term nation -based
28 June 2020 employee benefits benefits benefits benefits payments Total
Short Long
-Term -Term
Cash Incentive Non- Incentive
salary Cash monetary Super- Share
In AUD and fees bonuses benefits annuation Other options
Non-Executive
Directors
Michael Butler $121,385 — — $11,532 — — — — $132,917
Trent Peterson 1
$73,333 — — — — — — — $73,333
Kate Spargo $75,343 — — $7,158 — — — — $82,501
David MacLean $66,971 — — $6,362 — — — — $73,333
Kiera Grant $66,971 — — $6,362 — — — — $73,333
Simon West $66,971 — — $6,362 — — — — $73,333
Total Non- $470,974 — — $37,776 — — — — $508,750
Executive
Directors
Executive
Directors
Mark Ronan $551,875 $420,000 — $21,003 — — — $65,866 $1,058,744
Michael $408,616 $200,000 — $25,000 — — — $33,071 $666,687
Cherubino
Other Senior
Executives
Ashley $376,540 $339,500 $22,115 — — — $501,908 $1,240,063
Gardner2
Total $1,337,031 $959,500 — $68,118 — — — $600,845 $2,965,494
Executives
Total 2020 $1,808,005 $959,500 — $105,894 — — — $600,845 $3,474,244
1. The Director fees for Trent Peterson for the period July 2019 to March 2020 were paid to Catalyst Investment Managers Pty Ltd. Directors fees for the period April 2020 to
June 2020 were paid directly to Mr Peterson.
2. Ashley Gardner commenced as Chief Financial Officer on 14 August 2019. Mr Gardner’s share-based payments consist of $29,837 of share options, and $472,071 related to the non-
recourse interest free loan provided to acquire shares in the Company.
38 ADAIRS LIMITED
Shareholdings of Key Management Personnel
The following table details the ordinary shareholdings and the movements in the shareholdings of KMP (including their related
entities) for FY2021.
Received on
Held at Granted as exercise of Other net Held at
No. of Shares 28 June 2020 Remuneration options change 27 June 2021
Non-Executive Directors
Brett Chenoweth — — — — —
Michael Butler 599,724 — — (599,724) 1
n.a.
Trent Peterson 1,405,334 — — — 1,405,334
Kate Spargo 41,667 — — — 41,667
David MacLean 2,993,486 — — — 2,993,486
Kiera Grant 142,572 — — 27,8552
170,427
Simon West — — — — —
Executive Directors —
Mark Ronan 681,668 — — — 681,668
Michael Cherubino 2,058,135 — 59,074 — 2,117,209
Other Senior Executives —
Ashley Gardner 572,300 — — 572,300
1. “Other net change” for Michael Butler reflects that he ceased to a Director during FY2021 and was not a KMP at 27 June 2021.
2. “Other net change” for Kiera Grant reflects on market ordinary share purchases made by her over the course of FY2021.

Option issued to Key Management Personnel

The following table discloses the details of option schemes awarded to KMP in FY2021 and prior reporting periods.
Fair No of
value per Number Vested Number options
option vested in the forfeited exercised Exercise
No. of Share Grant Quantity at Grant during period during during price Vesting Expiry
Options date Granted Date the year % the year the year ($) date date
Non-
Executive
Directors
Michael — — — —
Butler
Trent — — — —
Peterson
Kate Spargo — — — —
David — — — —
MacLean
Kiera Grant — — — —
Simon West — — — —
Executive
Directors
Mark Ronan 18 Nov 16 651,000 $0.27 103,379 16% 547,621 — $2.00 30 Jun 20 18 Nov 22
2 Nov 17 900,000 $0.39 — $1.75 30 Jun 21 2 Nov 23
26 Oct 18 540,000 $0.43 — $2.40 3 Jul 22 26 Oct 24
25 Oct 19 900,000 $0.38 — $1.86 2 Jul 23 25 Oct 25
26 Oct 20 675,000 $0.90 — $4.04 30 Jun 24 26 Oct 26
Michael 18 Nov 16 372,000 $0.27 59,074 16% 312,926 59,074 $2.00 30 Jun 20 18 Nov 22
Cherubino
2 Nov 17 510,000 $0.39 — $1.75 30 Jun 21 2 Nov 23
26 Oct 18 315,000 $0.43 — $2.40 3 Jul 22 26 Oct 24

25 Oct 19 400,000 $0.38 — $1.86 2 Jul 23 25 Oct 25
26 Oct 20 300,000 $0.90 — $4.04 30 Jun 24 26 Oct 26
Other Senior
Executives
Ashley 25 Oct 19 700,000 $0.38 — $1.86 2 Jul 23 25 Oct 25
Gardner
26 Oct 20 525,000 $0.90 — $4.04 30 Jun 24 26 Oct 26
40 ADAIRS LIMITED
Option holdings of Key Management Personnel
The following table details the share option holdings and the movements in the share options of KMP (including their personally
related entities) for FY2021. This was the fifth year options were granted to Senior Executives as LTI remuneration.
Vested and
exercisable
Held at Held at as at
No. of Share 28 June Quantity 27 June 27 June
Options 2020 Granted Exercised Forfeited Lapsed 2021 Vested % 2021
Non-Executive
Directors
Michael Butler — — — — — — — —
Trent Peterson — — — — — — — —
Kate Spargo — — — — — — — —
David MacLean — — — — — — — —
Executive
Directors
Mark Ronan 2,443,379 675,000 — — — 3,118,379 3.3% 103,379
Michael 1,284,074 300,000 (59,074) — — 1,525,000 — —
Cherubino
Other Senior
Executives
Ashley Gardner 700,000 525,000 — — — 1,225,000 — —
For details on the valuation of the options, including models and assumptions used, please refer to Note 26.
Signed in accordance with a resolution of the Directors.
On behalf of the Board

Brett Chenoweth Mark Ronan
Chair Chief Executive Officer and Managing Director
Melbourne
19 August 2021

AUDITOR’S INDEPENDENCE
DECLARATION
Ernst & Young Tel: +61 3 9288 8000

8 Exhibition Street Fax: +61 3 8650 7777
Melbourne VIC 3000 Australia ey.com/au
GPO Box 67 Melbourne VIC 3001
Auditor’s Independence Declaration to the Directors of Adairs Limited
As lead auditor for the audit of the financial report of Adairs Limited for the 52 weeks ended 27 June
2021, I declare to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in

relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Adairs Limited and the entities it controlled during the financial
period.
Ernst & Young
Joanne Lonergan
Partner
Melbourne
19 August 2021
A member firm of Ernst & Young Global Limited

Liability limited by a scheme approved under Professional Standards Legislation
42 ADAIRS LIMITED
INDEPENDENT AUDITOR’S
REPORT
Ernst & Young Tel: +61 3 9288 8000

8 Exhibition Street Fax: +61 3 8650 7777
Melbourne VIC 3000 Australia ey.com/au
GPO Box 67 Melbourne VIC 3001
Independent Auditor's Report to the Members of Adairs Limited
Report on the Audit of the Financial Report

Opinion
We have audited the financial report of Adairs Limited (the Company) and its subsidiaries (collectively
the Group), which comprises the consolidated statement of financial position as at 27 June 2021, the
consolidated statement of profit or loss, the consolidated statement of other comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for the 52
weeks then ended, notes to the financial statements, including a summary of significant accounting
policies, and the directors declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
a) giving a true and fair view of the consolidated financial position of the Group as at 27 June
2021 and of its consolidated financial performance for the 52 weeks ended on that date; and
b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.


Independent Auditor’s Report
Carrying value of inventories
Why significant How our audit addressed the key audit matter
As at 27 June 2021, the Group held $68.0m Our audit procedures included the following:
million in inventories representing 16% of total
► Assessed the application of inventory
assets.
costing methodologies, and whether this
As detailed in Note 2.4(i) and Note 8 of the was consistent with Australian Accounting
financial report, inventories are valued at the Standards.
lower of cost and net realisable value. There is
judgment involved in determining the cost of ► Assessed the effectiveness of relevant
inventories and in assessing net realisable controls in relation to the inventory costing
value. process and assessed the accuracy of the
Group’s inventory valuation model, on a
In determining the cost of inventories, the sample basis.
Group considers elements relating to the costs
to operate the Group’s warehouses, as well as ► Assessed the basis for inventory provisions
freight, duty, exchange rates and relevant recorded by the Group to determine
insurance costs. Judgments were involved in whether inventory was recorded at the
the process of allocating these costs to lower of cost and net realisable value. In
inventories. doing so, we examined the ageing profile of
The Group sells homeware and home furnishing inventories, the process for identifying
products which are subject to changing specific slow-moving inventories and
consumer demands and fashion trends, historical inventory turnover.
increasing the level of judgment involved in ► Considered the impact on inventory
estimating the value of inventory which may be provisions of retail promotional sales at or
sold below cost and determining the net
subsequent to 27 June 2021 and
realisable value of this inventory. Such
compared the selling prices with the
judgments include expectations for future sales
carrying value of inventories inclusive of
and inventory liquidation plans.
selling costs.
Given the significance of the inventory balance
and judgment involved in determining the
carrying value of inventories, this was
considered a key audit matter.

44 ADAIRS LIMITED
Carrying value of intangible assets
Why significant How our audit addressed the key audit matter
As at 27 June 2021, 47% of the Group’s total Our audit procedures, involving our valuation
assets was represented by goodwill and specialists where necessary, included the
indefinite life brand names recognised from following;
business combinations.
► Assessed the application of the Group’s
As detailed in Note 2(m) and Note 10 of the valuation methodology.
financial report, the goodwill and brand names
are tested by the Group for impairment ► Assessed the key inputs and assumptions,
annually. These assets are allocated to and including forecasted cash flows, gross
tested within the Adairs and Mocka segment margins, discount rates and growth rates
level. adopted in the valuation. We agreed the
forecast cashflows to the Board approved
The recoverable amounts have been
2022 budget.
determined based on a value-in-use model
referencing discounted cash flow forecasts. ► Compared the data used in the value in use
This model contains estimates and significant model to the actual and budgeted financial
judgments regarding future projections and the performance of the underlying cash
achievement of those forecasts which are generating unit.
critical to the assessment of impairment,
particularly planned growth rates and gross ► Performed sensitivity analysis on key
margins. inputs, assumptions and forecast financial
performance to determine whether any
These estimates are based on conditions reasonably possible change could result in
existing and emerging as at 27 June 2021,
impairment.
including management’s assessment of the
future impacts of the COVID-19 pandemic, ► Compared earnings multiples derived from
which is impacting the markets within which the the Group’s value in use model to those
Group operates to varying degrees. observable from external market data of
Note 10 of the financial report details the comparable listed entities.
assessment method, including the key ► Assessed the adequacy of the related
underlying assumptions, the results of the disclosures made in the financial report.
assessment as well as the impact of considering
the sensitivities associated with reasonably
possible changes in those assumptions.
Carrying value of intangible assets was
considered a key audit matter due to the
significance of this balance and the judgments
involved.


Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the
information included in the Group’s 2021 Annual Report, but does not include the financial report and
our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report

The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.

46 ADAIRS LIMITED
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group
to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.


Report on the Audit of the Remuneration Report

Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 26 to 41 of the directors' report for the
52 weeks ended 27 June 2021.
In our opinion, the Remuneration Report of Adairs Limited for the 52 weeks ended 27 June 2021,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Ernst & Young
Joanne Lonergan
Partner
Melbourne
19 August 2021

48 ADAIRS LIMITED
DIRECTORS’
DECLARATION
In accordance with a resolution of the Directors of Adairs Limited, we state that:
1. In the opinion of the Directors:
a. the financial statements and notes of Adairs Limited for the 52 weeks ended 27 June 2021 are in accordance with the
Corporations Act 2001, including:
i. giving a true and fair view of the consolidated entity’s financial position as at 27 June 2021 and of its performance for
the 52 weeks ended on that date; and
ii. complying with Accounting Standards (including the Australian Accounting Interpretations) and the Corporations
Regulations 2001;
b. the financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 2; and
c. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
2. This declaration has been made after receiving the declarations required to be made to the Directors by the Chief Executive
Officer and Chief Financial Officer in accordance with section 295A of the Corporations Act 2001 for the 52 weeks ended
27 June 2021.
On behalf of the Board

Brett Chenoweth Mark Ronan
Chair Chief Executive Officer and Managing Director
Melbourne
19 August 2021

CONSOLIDATED STATEMENT OF PROFIT OR LOSS
for the 52 weeks ended 27 June 2021
52 weeks 52 weeks
ended ended
27 June 2021 28 June 2020
Note $'000 $'000
Revenue from contracts with customers 4(a) 499,762 388,933

REVENUES 499,762 388,933
Cost of sales (196,469) (166,814)
GROSS PROFIT 303,293 222,119
Other income 4(b) 174 296
Depreciation and amortisation expenses 4(c) (44,575) (39,318)
Finance expenses 4(d) (7,457) (6,250)
Salaries and employee benefits expenses 4(e) (100,868) (78,865)
Occupancy expenses (5,059) (10,066)
Advertising expenses (15,564) (10,760)
Other expenses from ordinary activities 4(f) (27,071) (20,481)
Costs associated with the acquisition of Mocka 4(g) (7,583) (3,884)
PROFIT BEFORE INCOME TAX 95,290 52,791
Income tax expense 5 (31,548) (17,510)
PROFIT FOR THE PERIOD 63,742 35,281
EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY
EQUITY HOLDERS OF THE PARENT
Basic earnings per share 23 37.7 cents 21.0 cents
Diluted earnings per share 23 36.5 cents 20.7 cents
This Consolidated Statement of Profit or Loss should be read in conjunction with the notes to the financial statements.
50 ADAIRS LIMITED
CONSOLIDATED STATEMENT OF
OTHER COMPREHENSIVE INCOME
52 weeks 52 weeks
ended ended
27 June 2021 28 June 2020
Note $'000 $'000
PROFIT FOR THE PERIOD 63,742 35,281

OTHER COMPREHENSIVE INCOME
Items that may be reclassified subsequently to profit or loss
Net movement of cash flow hedges (911) (251)
Income tax relating to the components of other comprehensive income 5 273 74
Exchange differences on translation of foreign operations 97 (171)
Other comprehensive income for the period, net of tax (541) (348)
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 63,201 34,933
This Consolidated Statement of Other Comprehensive Income should be read in conjunction with the notes to the
financial statements.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 27 June 2021
As at As at
27 June 2021 28 June 2020
Note $'000 $'000
ASSETS
CURRENT ASSETS
Cash and cash equivalents 6 25,970 23,922
Trade and other receivables 7 2,276 2,949
Inventories 8 67,996 43,404
Other assets 7 10,143 6,754
Derivative financial instruments 18 — 589
TOTAL CURRENT ASSETS 106,385 77,618
NON-CURRENT ASSETS
Property, plant and equipment 9 21,168 20,843
Intangibles 10 197,340 196,143
Right of use asset 17 89,579 94,375
Derivative financial instruments 18 357 149
TOTAL NON-CURRENT ASSETS 308,444 311,510
TOTAL ASSETS 414,829 389,128
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 11 43,811 31,257
Other liabilities 13 15,034 10,721
Earn-out liabilities 12 44,726 —
Lease liabilities 17 33,473 36,252
Current tax liabilities 14,453 9,931
Provisions 15 7,785 6,121
Derivative financial instruments 18 507 —
TOTAL CURRENT LIABILITIES 159,789 94,282
NON-CURRENT LIABILITIES
Deferred tax liabilities 5 11,037 12,182
Other liabilities 13 1,460 1,083
Earn-out liabilities 12 1,012 35,495
Interest bearing liabilities 14 — 24,927
Lease liabilities 17 73,721 78,348
Provisions 15 3,150 2,240
TOTAL NON-CURRENT LIABILITIES 90,380 154,275
TOTAL LIABILITIES 250,169 248,557
NET ASSETS 164,660 140,571
EQUITY
Contributed equity 16(a) 73,823 74,098
Share-based payment reserve 16(b) 2,030 289
Foreign currency translation reserve 16(c) (101) (198)
Cash flow hedge reserve 16(d) (106) 532
Retained earnings 16(e) 89,014 65,850
TOTAL EQUITY 164,660 140,571
This Consolidated Statement of Financial Position should be read in conjunction with the notes to the financial statements.
52 ADAIRS LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Foreign
Share-based Cash flow currency
Ordinary payment hedge translation Retained
shares reserve reserve reserve earnings Total
Note $'000 $'000 $'000 $'000 $'000 $'000
At 28 June 2020 74,098 289 532 (198) 65,850 140,571

Profit for the period — — — — 63,742 63,742
Other comprehensive
income for the period — — (638) 97 — (541)
Total comprehensive
income for the period — — (638) 97 63,742 63,201
Transactions with owners
in their capacity as owners:
Dividend payment 25 — — — — (40,578) (40,578)
Exercise of share options 26 (275) — — — — (275)
Share-based payments 26 — 1,741 — — — 1,741
At 27 June 2021 73,823 2,030 (106) (101) 89,014 164,660
Foreign
Share-based Cash flow currency
Ordinary payment hedge translation Retained
shares reserve reserve reserve earnings Total
Note $'000 $'000 $'000 $'000 $'000 $'000
At 30 June 2019 68,349 329 709 (27) 48,957 118,317

Impact of adoption of new
accounting standards (i) — — — — (5,118) (5,118)
At 30 June 2019 (adjusted) 68,349 329 709 (27) 43,839 113,199
Profit for the period — — — — 35,281 35,281
Other comprehensive
income for the period — — (177) (171) — (348)
Total comprehensive
income for the period — — (177) (171) 35,281 34,933
Transactions with owners
in their capacity as owners:
Dividend payment 25 — — — — (13,270) (13,270)
Issued Shares 5,749 — — — — 5,749
Issue of non-recourse loan 26 — (750) — — — (750)
Share-based payments 26 — 710 — — — 710
At 28 June 2020 74,098 289 532 (198) 65,850 140,571
i. The Group has adopted AASB 16 Leases on a modified retrospective basis. This resulted in a decrease of $5,118,000 to retained earnings as at 1 July 2019, being the cumulative effect
on initial application of the standard. The comparative results for the 52 weeks ended 30 June 2019 were not restated as permitted by the standard.
This Consolidated Statement of Changes in Equity should be read in conjunction with the notes to the financial statements.

CONSOLIDATED STATEMENT OF CASH FLOWS
52 weeks 52 weeks
ended ended
27 June 2021 28 June 2020
Note $'000 $'000
CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from customers (inclusive of GST) 554,429 430,336
Payments to suppliers and employees (inclusive of GST) (413,709) (323,105)
Interest received 31 90
Income tax paid (27,901) (11,340)
Receipts of Government grants 14,898 7,136
Repayment of Government grants (6,077) —
Interest paid (4,799) (5,810)
Net cash flows from operating activities 6 116,872 97,307
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment and intangibles (11,348) (7,531)
Acquisition of subsidiary, net of cash acquired — (42,509)
Net cash flows used in investing activities (11,348) (50,040)
CASH FLOWS FROM FINANCING ACTIVITIES
Drawings of borrowings 12,000 48,000
Repayment of borrowings (38,000) (47,000)
Payment of borrowing costs — (865)
Dividends paid 25 (40,578) (13,270)
Payment of principal portion of lease liabilities (36,618) (26,885)
Net payment from exercise of share options (275) —
Net cash flows used in financing activities (103,471) (40,020)
Net increase in cash and cash equivalents 2,053 7,247
Net foreign exchange differences (5) (33)
Cash and cash equivalents at beginning of the period 23,922 16,708
CASH AND CASH EQUIVALENTS AT END OF PERIOD 6 25,970 23,922
This Consolidated Statement of Cash Flows should be read in conjunction with the notes to the financial statements.
54 ADAIRS LIMITED
NOTES TO THE
FINANCIAL STATEMENTS
Note 1. CORPORATE INFORMATION

The consolidated financial statements of Adairs Limited and its subsidiaries (collectively, the Group) for the 52 weeks ended
27 June 2021 were authorised for issue in accordance with a resolution of the directors on 19 August 2021.
Adairs operates on a retail accounting calendar which consists of four 13 weeks quarters based on weekly financial and operating
performance, equating to an annual 52 week reporting period with a 53 week reporting period every five to six years. In FY2021,
there was a 52 week reporting period (the comparative FY2020 period was also a 52 week reporting period).
Adairs Limited (the Company or the Parent) is a for profit company limited by shares incorporated in Australia whose shares are
publicly traded on the Australian Securities Exchange.
The Group is principally engaged in retail operations in the manchester and homewares market segments within Australia and
New Zealand. The Group’s principal place of business is International Court, Scoresby, Victoria, Australia. Further information on
the nature of the operations and principal activities of the Group is provided in the Directors’ Report.
Note 2. SIGNIFICANT ACCOUNTING POLICIES

2.1. Basis of Preparation
The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the
Corporations Act 2001, Australian Accounting Standards, and other authoritative pronouncements of the Australian Accounting
Standards Board. The financial report has also been prepared on a historical cost basis, except for derivative financial instruments
and contingent consideration which have been measured at fair value.
The financial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars ($000) unless
otherwise stated.
Certain classifications have been made in the consolidated financial statements to ensure prior year comparative information is
consistent with the current year presentations.
The consolidated financial statements provide comparative information in respect of the previous period where there is a
retrospective application of an accounting policy, a retrospective restatement, or a reclassification of items in financial statements.
The financial report has been prepared on the basis of accounting practices applicable to a going concern. This basis presumes
that funds will be available to finance future operations and the realisation of assets and settlement of liabilities will occur in the
ordinary course of business.
2.2. Compliance with International Financial Reporting Standards (IFRS)

The financial report also complies with International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board.
2.3. Changes in accounting policy, accounting standards and interpretations

The accounting policies adopted in the preparation of the consolidated financial statements are consistent with those followed in
the preparation of the Group’s annual financial statements for the 52 weeks ended 28 June 2020, except as follows:
i. New and amended standards and interpretations

a. AASB 2018-6 Amendments to Australian Accounting Standards – Definition of a Business
The amendment to AASB 3 Business Combinations clarifies that to be considered a business, an integrated set of activities and
assets must include, at a minimum, an input and a substantive process that, together, significantly contribute to the ability to
create output. These amendments had no impact on the consolidated financial statements of the Group.
b. AASB 2019-3 Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform
The amendments to AASB 9 and AASB 139 Financial Instruments: Recognition and Measurement provide a number of reliefs, which
apply to all hedging relationships that are directly affected by interest rate benchmark reform. These amendments have no impact
on the consolidated financial statements of the Group.
c. AASB 2018-7 Amendments to Australian Accounting Standards – Definition of Material
The amendments provide a new definition of material that states, “information is material if omitting, misstating or obscuring it
could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the
basis of those financial statements, which provide financial information about a specific reporting entity.” These amendments had
no impact on the consolidated financial statements of the Group.

Notes to the
Financial Statements
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES continued

d. AASB 2019-1 Amendments to Australian Accounting Standards – References to the Conceptual Framework
The revised Conceptual Framework includes some new concepts, updated definitions and recognition criteria for assets and
liabilities and clarifies some important concepts. These amendments had no impact on the consolidated financial statements of
the Group.
e. AASB 138 Intangible Assets – Cloud computing arrangements
In April 2021, the International Financial Reporting Standards Interpretations Committee (IFRIC) issued a final agenda decision
which impacts SaaS arrangements agenda decisions:
› Configuration or customisation costs in a cloud computing arrangement — this decision discusses whether configuration or
customisation expenditure relating to SaaS arrangements can be recognised as an intangible asset and if not, over what time
period the expenditure is expensed.
The adoption of the above agenda decisions had no material impact on the consolidated financial statements of the Group.
Refer to Note 2.4 (l) for an outline of the accounting policy for Software-as-a-Service (SaaS) arrangements.
f. IAS 2 Inventories – Costs necessary to sell Inventories
In June 2021, IFRIC published an agenda decision in relation to the accounting treatment when determining net realisable value
(NRV) of inventories, in particular what costs are necessary to sell inventories under IAS 2 Inventories. The Group is currently
assessing the impact the agenda decision will have on its current accounting policy and whether an adjustment to inventory may
be necessary.
Accordingly, a reliable estimate of the impact of the IFRIC agenda decision on the Group cannot be made at the date of this
report, however based on preliminary analysis performed, the Group is not expecting a material impact from the adoption of
the IFRIC agenda decision. The Group expects to complete the implementation of the above IFRIC agenda decision as part of its
26 December 2021 reporting.
g. Amendments to AASB 16 Covid-19 Related Rent Concessions beyond 30 June 2021
AASB 16 was amended to extend the availability of the practical expedient to not account for COVID-19-related rent concessions as
lease modifications by one year. Provided all conditions are met, this expedient can be applied to rent concessions that reduce only
lease payments originally due on or before 30 June 2022.
The Group has early adopted amendments to AASB 16 Covid-19 Related Rent Concessions.
ii. Accounting standards and interpretations issued but not yet effective
a. Amendments to AASB 101: Classification of Liabilities as Current or Non-current
In January 2020, the AASB issued amendments to paragraphs 69 to 76 of AASB 101 to specify the requirements for classifying
liabilities as current or non-current. The amendments clarify:
› What is meant by a right to defer settlement
› That a right to defer must exist at the end of the reporting period
› That classification is unaffected by the likelihood that an entity will exercise its deferral right
› That only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a liability not
impact its classification.
The amendments are effective for annual reporting periods beginning on or after 1 January 2023 and must be applied
retrospectively. The Group is currently assessing the impact the amendments will have on current practice, however does not
expect there to be a material impact on the Group.
b. Property, Plant and Equipment: Proceeds before Intended Use – Amendments to AASB 116
In May 2020, the IASB issued Property, Plant and Equipment — Proceeds before Intended Use, which prohibits entities deducting
from the cost of an item of property, plant and equipment, any proceeds from selling items produced while bringing that asset
to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an
entity recognises the proceeds from selling such items, and the costs of producing those items, in profit or loss. The amendment
is effective for annual reporting periods beginning on or after 1 January 2022 and must be applied retrospectively to items of
property, plant and equipment made available for use on or after the beginning of the earliest period presented when the entity
first applies the amendment. The amendments are not expected to have a material impact on the Group.
c. Onerous Contracts – Costs of Fulfilling a Contract – Amendments to AASB 137
In May 2020, the IASB issued amendments to AASB 137 to specify which costs an entity needs to include when assessing whether
a contract is onerous or loss-making.
56 ADAIRS LIMITED
The amendments apply a “directly related cost approach”. The costs that relate directly to a contract to provide goods or services
include both incremental costs and an allocation of costs directly related to contract activities. General and administrative costs
do not relate directly to a contract and are excluded unless they are explicitly chargeable to the counterparty under the contract.
The amendments are effective for annual reporting periods beginning on or after 1 January 2022 and are not expected to have
a material impact on the Group.
d. D
eferred Tax related to Assets and Liabilities arising from a single transaction – AASB 2021-5 –
Amendments to AASs
AASB 112 Income Taxes requires entities to account for income tax consequences when economic transactions take place, and not
at the time when income tax payments or recoveries are made. Accounting for such tax consequences, means entities need to
consider the differences between the tax rules and the accounting standards.
In specified circumstances, companies are exempt from recognising deferred tax when they recognise assets or liabilities for the
first time. The amendments clarify that the initial recognition exception does not apply to transactions where both an asset and a
liability are recognised in a single transaction. Accordingly, deferred tax is required to be recognised on such transactions.
The amendments are effective for annual reporting periods beginning on or after 1 January 2023 and are not expected to have a
material impact on the Group.
e. A
ASB 2021-2 Amendments to Australian Accounting Standards – Disclosure of Accounting Policies and
Definition of Accounting Estimates
The amendments to Australian Accounting Standards specifically amends:
› AASB 7 Financial Instruments: Disclosures, to clarify that information about measurement bases for financial instruments is
expected to be material to an entity’s financial statements
› AASB 101 Presentation of Financial Statements, to require entities to disclose their material accounting policy information
rather than their significant accounting policies
› AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors, to clarify how entities should distinguish changes
in accounting policies and changes in accounting estimates
› AASB 134 Interim Financial Reporting, to identify material accounting policy information as a component of a complete set of
financial statements
› AASB Practice Statement 2 Making Materiality Judgements, to provide non-mandatory guidance on how to apply the concept of
materiality to accounting policy disclosures.
The amendments are effective for annual reporting periods beginning on or after 1 January 2023 and are not expected to have a
material impact on the Group.
2.4. Summary of significant accounting policies

a. Current versus non-current classification
The Group presents assets and liabilities in the Statement of Financial Position based on current and non-current classification.
An asset is current when it is:
› Expected to be realised or intended to be sold or consumed in the Group’s normal operating cycle;
› Held primarily for the purpose of trading;
› Expected to be realised within 12 months after the reporting period; or
› Cash or a cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after
the reporting period.
The Group classifies all other assets as non-current.
A liability is current when:
› It is expected to be settled in the Group’s normal operating cycle;
› It is held primarily for the purpose of trading;
› It is due to be settled within 12 months after the reporting period; or
› There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
The Group classifies all other liabilities as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

Notes to the

b. Trade and other receivables
Other receivables from lessors and suppliers comprise the majority of the trade and other receivables balance. Trade receivables
are initially recognised at transaction price and other receivables at fair value, and subsequently measured at amortised cost less
an allowance for any expected credit losses. A provision for expected credit loss is determined based on historic credit loss rates
and adjusted for forward looking factors specific to the debtor and the economic environment.
c. Basis of consolidation
The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 27 June 2021.
The Group controls an investee if and only if the Group has:
› Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);
› Exposure, or rights, to variable returns from its involvement with the investee; and
› The ability to use its power over the investee to affect its returns.
The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent
accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist.
All intercompany balances and transactions, including unrealised profits arising from intra-group transactions have been
eliminated in full. Unrealised losses are eliminated unless costs cannot be recovered.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group and cease to be consolidated from
the date on which control is transferred out of the Group.
Investments in subsidiaries held by the Group are accounted for at cost in the separate financial statements of the parent entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. The acquisition method of accounting
involves allocating the cost of the business combination to the fair value of the assets acquired and the liabilities and contingent
liabilities assumed at the date of acquisition.
d. Goodwill
Goodwill on acquisition is initially measured at cost, being the excess of the consideration for the business combination over
the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities. Following initial
recognition, goodwill is measured at cost less any accumulated impairment losses.
Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances dictate that the carrying
value may be impaired.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each
of the Group’s cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the
combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units. Each
unit or group of units to which the goodwill is so allocated:
› represents the lowest level within the Group at which the goodwill is monitored for internal management; and
› is not larger than a segment based on the Group’s primary reporting format determined in accordance with
AASB 8 Operating Segments.
Impairment is determined by assessing the recoverable amount of the cash-generating unit or group of cash generating units to
which the goodwill relates.
When the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised.
When goodwill forms part of a cash-generating unit or group of cash generating units and part of the operation within that unit
is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when
determining the gain or loss on disposal of the operation.
Goodwill disposed of in this circumstance is measured on the basis of the relative values of the operation disposed of and the
portion of the cash-generating unit retained.
Impairment losses recognised for goodwill are not subsequently reversed.
e. Income tax
Current tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the
taxation authorities based on the current period’s taxable income. The tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted by the reporting date.
58 ADAIRS LIMITED
Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities
and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
› when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction
that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit
or loss; and
› when taxable temporary differences are associated with investments in subsidiaries, associates or interests in joint ventures,
and the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary difference
will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused
tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences
and the carry-forward of unused tax credits and unused tax losses can be utilised, except:
› when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an
asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; or
› when the deductible temporary difference associated with investments in subsidiaries, associates and interests in joint ventures,
in which case deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in
the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the extent that it has
become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset
is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the
reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are
recognised in correlation to the underlying transaction either in OCI or directly in equity.
Tax consolidation legislation
Adairs Limited and its wholly-owned Australian controlled entities, excluding Mocka Products Pty Ltd, implemented the tax
consolidation legislation as of 1 November 2010.
The head entity, Adairs Limited, and the controlled entities in the tax consolidated group continue to account for their own current
and deferred tax amounts. The tax consolidated group has applied the group allocation approach in determining the appropriate
amount of current taxes and deferred taxes to allocate to members of the tax consolidated group.
In addition to its own current and deferred tax amounts, the legal entity also recognises the current tax liabilities (or assets)
and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax
consolidated group.
Assets or liabilities arising under tax funding agreements with the tax consolidated group are recognised as amounts receivable
from or payable to other entities in the tax consolidated group.
Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are recognised
as a contribution to (or distribution from) wholly-owned tax consolidated entities.
f. Other taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
› when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the
GST is recognised as part of the cost of acquisition of the asset or as part of the expense item; and/or
› receivables and payables, which are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in
the Statement of Financial Position. Commitments and contingencies are disclosed net of the amount of GST recoverable from,
or payable to, the taxation authority.

Notes to the

Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from
investing and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating
cash flows.
g. Foreign currencies
The Group’s consolidated financial statements are presented in Australian dollars, which is also the Parent functional currency.
For each entity, the Group determines the functional currency and items included in the financial statements of each entity
are measured using that functional currency. The Group uses the direct method of consolidation and on disposal of a foreign
operation, the gain or loss that is reclassified to profit or loss reflects the amount that arises from using this method.
i. Transactions and balances
Transactions in foreign currencies are initially recorded by the Group’s entities at their respective functional currency spot rates at
the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange
at the reporting date.
Differences arising on settlement or translation of monetary items are recognised in profit or loss.
ii. Group companies
On consolidation, the assets and liabilities of foreign operations are translated into Australian dollars at the rate of exchange
prevailing at the reporting date and their statements of profit or loss are translated at exchange rates prevailing at the dates of
the transactions. The exchange differences arising on translation for consolidation are recognised in OCI. On disposal of a foreign
operation, the component of OCI relating to that particular foreign operation is reclassified to profit or loss.
Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and
liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the spot rate of
exchange at the reporting date.
h. Revenue from contracts with customers
Revenue from the retail sales is recognised when the performance obligation is satisfied which is generally when the customer
obtains control of the goods at the point of sale.
› Linen Lover membership program revenue
The Adairs segment operates a membership program, Linen Lover, from which a membership fee is received from the customer
upon joining. Membership allows customers to benefit from additional discounts, extended returns periods, VIP shopping events
and free shipping when they purchase products from the Group’s retail and e-commerce stores. On purchase of a membership,
customers are granted a coupon that can be used within 30 days.
The Group has identified the following performance obligations with respect to the Linen Lovers membership program, that
include:
1. Welcome Voucher – satisfied at a point in time upon purchase of membership; and
2. Ongoing membership benefits – satisfied over time on a straight-line basis across the two-year membership period as the
customer has the right to utilise the benefits of membership.
The Group has estimated the standalone selling price for each performance obligation based on the estimated value attributed to
each performance obligation. Revenue is recognised as each performance obligation is satisfied.
› Lay-by sales
The Adairs segment offers a lay-by service to customers, where control of the goods under the lay-by arrangement passes to the
customer when the goods have been paid for in full and collected by the customer. It is at this point that revenue is recognised.
› Rights of return
When a contract provides a customer with a right to return the goods within a specified period (typically 30-60 days, with
extended terms of 60-90 days for Linen Lover members), the consideration received from the customer is variable because the
contract allows the customer to return the products. The Group uses the expected value method to estimate the goods that will be
returned because this method best predicts the amount of variable consideration to which the Group will be entitled. The Group
has deferred revenue for the likelihood of sales to be returned and presents a refund liability and an asset to recover the products
from a customer separately in the statement of financial position.
› Gift card breakage revenue
Gift card breakage revenue is recognised in proportion to the pattern of rights exercised by the customer and represents a form
of variable consideration. In recognising breakage revenue, the Group takes into consideration the estimated breakage, estimated
redemption of gift cards, and the breakage to be recognised at the time of redemption.
60 ADAIRS LIMITED
› Online sales
Online sales are recognised upon the satisfaction of the Group’s performance obligation which is deemed to occur upon delivery of
the customer’s order.
Furthermore, postage costs incurred to deliver online sales to the customer are classified as a Cost of sales in the Statement of
Profit or Loss, being a cost incurred to fulfil the Group’s performance obligation.
i. Inventories
Inventories held by the Group are finished goods and are valued at the lower of cost and net realisable value.
The value of finished goods includes the purchase cost plus a proportion of the freight, handling and warehouse costs incurred to
deliver the goods to the point of sale.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated direct costs necessary to
make the sale.
j. Cash dividend and non-cash distribution to equity holders of the Parent
The Parent recognises a liability to pay cash or make non-cash distributions to equity holders of the Parent when the
distribution is authorised and the distribution is no longer at the discretion of the Parent. A corresponding amount is recognised
directly in equity.
Non-cash distributions are measured at the fair value of the assets to be distributed with fair value re-measurement recognised
directly in equity.
Upon distribution of non-cash assets, any difference between the carrying amount of the liability and the carrying amount of the
assets distributed is recognised in the Statement of Profit or Loss.
k. Property, plant and equipment
Plant and equipment are stated at historical cost less accumulated depreciation and any accumulated impairment losses.
Depreciation is calculated on either a straight-line or diminishing value basis over the estimated useful life of the asset as follows:
Class Period
Computer hardware 2 – 3 years

Plant and other equipment 5 years
Leasehold improvements Over lease term
Shop fixtures and fittings Over lease term
The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
i. Derecognition and disposal

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise
from its use or disposal.
Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the
carrying amount of the asset) is included in the Statement of Profit or Loss in the year the asset is derecognised.
l. Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a
business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost
less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles, excluding capitalised
development costs, are not capitalised and the related expenditure is reflected in profit or loss in the period in which the
expenditure is incurred.
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is
an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible
asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the
expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation
period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible
assets with finite lives is recognised in the Statement of Profit or Loss as the expense category that is consistent with the function
of the intangible assets.

Notes to the

Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the
cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues
to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds
and the carrying amount of the asset and are recognised in the Statement of Profit or Loss when the asset is derecognised.
i. Computer software and Software-as-a-Service (SaaS) arrangements
The Group records direct costs associated with the development of computer software for external direct costs of materials and
services consumed. Computer software has been determined to have a finite life and is amortised on a straight line basis over its
useful life.
SaaS arrangements are arrangements in which the Group/Company does not currently control the underlying software used in the
arrangement.
Where costs incurred to configure or customise SaaS arrangements result in the creation of a resource which is identifiable, and
where the company has the power to obtain the future economic benefits flowing from the underlying resource and to restrict
the access of others to those benefits, such costs are recognised as a separate intangible software asset and amortised over the
useful life of the software on a straight-line basis. The amortisation is reviewed at least at the end of each reporting period and any
changes are treated as changes in accounting estimates.
Where costs incurred to configure or customise do not result in the recognition of an intangible software asset, then those costs
that provide the Group/Company with a distinct service (in addition to the SaaS access) are now recognised as expenses when
the supplier provides the services. When such costs incurred do not provide a distinct service, the costs are now recognised as
expenses over the duration of the SaaS contract.
ii. Brand names
Brand Names have been determined to have an indefinite life, are not amortised, are acquired and are subject to impairment
testing annually or where an indicator of impairment exists. The indefinite-useful life reflects management’s intention to continue
to operate these brands to generate net cash inflows into the foreseeable future.
m. Impairment
The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists,
or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s
recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU’s) fair value less costs of disposal and its value in
use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely
independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less
costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate
valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded
companies or other available fair value indicators.
The Group bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each
of the Group’s CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period
of five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year.
Impairment losses of continuing operations, including impairment on inventories, are recognised in the Statement of Profit or Loss
in expense categories consistent with the function of the impaired asset.
For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that
previously recognised impairment losses no longer exist or have decreased. If such indication exists, the Group estimates the
asset’s or CGU’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the
assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is
limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that
would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such
reversal is recognised in the Statement of Profit or Loss.
Goodwill is tested for impairment annually at reporting date and when circumstances indicate that the carrying value may
be impaired.
62 ADAIRS LIMITED
Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill
relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised in the
Statement of Profit or Loss. Impairment losses relating to goodwill cannot be reversed in future periods.
Intangible assets with indefinite useful lives are tested for impairment annually at the CGU level, as appropriate, and when
circumstances indicate that the carrying value may be impaired.
n. Transaction costs
Transaction costs related to borrowings are recognised as expenses using the effective interest method as described in Note 2.4(r).
o. Leases
The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to
control the use of an identified asset for a period of time in exchange for consideration.
Group as a lessee
The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-
value assets. The Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use
the underlying assets.
› Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available
for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any
remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct
costs incurred, and lease payments made at or before the commencement date less any lease incentives received, plus an estimate
of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or
restoring the underlying asset to the condition required by the terms and conditions of the lease. Unless the Group is reasonably
certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are depreciated on
a straight-line basis over the shorter of its estimated useful life and the lease term. Right-of-use assets are subject to impairment.
› Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to
be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease
incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual
value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised
by the Group and payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to
terminate. The variable lease payments that do not depend on an index or a rate are recognised as an expense in the period on
which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement
date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease
liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying
amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed
lease payments or a change in the assessment to purchase the underlying asset.
› Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases of retail stores, warehouses and head office
(i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option).
It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered of low value.
Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the
lease term.
p. Cash and cash equivalents
Cash and cash equivalents in the Statement of Financial Position comprise cash at bank and in hand and short-term deposits with
an original maturity of three months or less that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above,
net of outstanding bank overdrafts. Bank overdrafts are included within interest-bearing loans and borrowings in current liabilities
on the Statement of Financial Position.

Notes to the

q. Employee benefits
i. Wages, salaries and annual leave
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months of
the reporting date are recognised in respect of employees’ services up to the reporting date. They are measured at the amounts
expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is
taken and are measured at the rates paid or payable.
ii. Long service leave
The liability for long service leave is recognised and measured in the provision for employee benefits and measured as the
present value of expected future payments to be made in respect of services provided by employees up to the reporting date
using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee
departures, and periods of service. Expected future payments are discounted using market yields at the reporting date on high
quality corporate bonds (Australian employees) and government bond rate (New Zealand employees) with terms to maturity and
currencies that match, as closely as possible, the estimated future cash outflows.
r. Interest-bearing loans and borrowings
All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable
transaction costs.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective
interest method.
Gains and losses are recognised in profit or loss when the liabilities are derecognised.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at
least 12 months after the reporting date.
s. Trade and other payables
Trade and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Group prior
to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of
the purchase of these goods and services. The amounts are unsecured and are usually paid within 30-120 days of recognition.
t. Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable
that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be
made of the amount of the obligation.
Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement
is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is
presented in the Statement of Comprehensive Income net of any reimbursement.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present
obligation at the reporting date.
If the effect of the time value of money is material, provisions are discounted using a pre-tax rate that reflects the risks specific to
the liability.
Where discounting is used, the increase in the provision due to the passage of time is recognised as a borrowing cost.
u. Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a
deduction net of tax from the proceeds.
v. Derivative financial instruments
The Group uses derivative financial instruments such as forward currency contracts to hedge its risks associated with foreign
currency fluctuations. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative
contract is entered into and are subsequently re-measured to fair value. Derivatives are carried as assets when their fair value is
positive and as liabilities when their fair value is negative.
Any gain or losses arising from the changes in the fair value of derivatives, except for those that qualify as cash flow hedges, are
taken directly to net profit or loss for the year as defined by AASB 9. The fair value of forward currency contracts is calculated by
reference to current forward exchange rates for contracts with similar maturity profiles.
64 ADAIRS LIMITED
For the purposes of hedge accounting, hedges are classified as:
› fair value hedges when they hedge the exposure to changes in the fair value of a recognised asset or liability;
› cash flow hedges when they hedge exposure to variability in cash flows that is attributable either to a particular risk associated
with a recognised asset or liability or to a forecast transaction; or
› hedges of a net investment in a foreign operation.
A hedge of the foreign currency risk of a firm commitment or highly probable forecast transaction is accounted for as a cash
flow hedge.
At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which the Group
wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge.
The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk
being hedged and how the entity will assess the hedging instrument’s effectiveness in offsetting the exposure to changes in the
hedged item’s fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving
offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been
highly effective throughout the financial reporting periods for which they were designated.
i. Cash flow hedges
Cash flow hedges are hedges of the Group’s exposure to variability in cash flows that is attributable to a particular risk associated
with a recognised asset or liability or a highly probable forecast transaction and that could affect profit or loss.
The effective portion of the gain or loss on the hedging instrument is recognised directly in equity, while the ineffective portion is
recognised in profit or loss.
Amounts taken to equity are transferred to the Statement of Profit or Loss when the hedged transaction affects profit or loss, such
as when hedged income or expenses are recognised or when a forecast sale or purchase occurs. When the hedged item is the cost
of a non-financial asset or liability, the amounts taken to equity are transferred to the initial carrying amount of the non-financial
asset or liability.
If the forecast transaction is no longer expected to occur, amounts previously recognised in equity are transferred to the
Statement of Profit or Loss. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover,
or if its designation as a hedge is revoked, amounts previously recognised in equity remain in equity until the forecast transaction
occurs. If the related transaction is not expected to occur, the amount is taken to the Statement of Profit or Loss.
w. Fair value measurement
The Group measures financial instruments such as derivatives at fair value at each reporting date. Fair value related disclosures
for financial instruments and non-financial assets that are measured at fair value or where fair values are disclosed are
summarised below:
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the
asset or transfer the liability takes place either:
› In the principal market for the asset or liability; or
› In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Group.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the
asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits
by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest
and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to
measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair
value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 Valuation techniques for which the lowest level input that is significant to the fair value directly or indirectly observable
Level 3 Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

Notes to the

For assets and liabilities that are recognised in the financial statements at fair value on a recurring basis, the Group determines
whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input
that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature,
characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
x. Share-based payments
Employees (including Senior Executives) of the Group receive remuneration in the form of share-based payments, whereby
employees render services as consideration for equity instruments (equity-settled transactions).
Equity-settled transactions
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate
valuation model, further details of which are given in Note 26.
That cost is recognised in employee benefits expense, together with a corresponding increase in equity (share-based payment
reserve), over the period in which the service and, where applicable, the performance conditions are fulfilled (the vesting period).
The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent
to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest.
The expense or credit in the Statement of Profit or Loss for a period represents the movement in cumulative expense recognised
as at the beginning and end of that period.
Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards,
but the likelihood of the conditions being met is assessed as part of the Group’s best estimate of the number of equity instruments
that will ultimately vest. Market performance conditions are reflected within the grant date fair value. Any other conditions
attached to an award, but without an associated service requirement, are considered to be non-vesting conditions. Non-vesting
conditions are reflected in the fair value of an award and lead to an immediate expensing of an award unless there are also service
and/or performance conditions.
No expense is recognised for awards that do not ultimately vest because non-market performance and/or service conditions have not
been met. Where awards include a market or non-vesting condition, the transactions are treated as vested irrespective of whether the
market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.
When the terms of an equity-settled award are modified, the minimum expense recognised is the grant date fair value of
the unmodified award, provided the original terms of the award are met. An additional expense, measured as at the date of
modification, is recognised for any modification that increases the total fair value of the share-based payment transaction, or is
otherwise beneficial to the employee. Where an award is cancelled by the Group or by the counterparty, any remaining element of
the fair value of the award is expensed immediately through profit or loss.
y. Government grants
Government grants are recognised where there is reasonable assurance that the grant will be received, and all attached conditions
will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods
that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognised as
income in equal amounts over the expected useful life of the related asset.
z. Business combinations
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of
the consideration transferred, measured at fair value at the acquisition date. Acquisition costs incurred are expensed and included
within Transaction expenses in the statement of profit or loss.
Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date.
Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity.
Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of AASB 9
Financial Instruments, is measured at fair value with the changes in fair value recognised in the statement of profit or loss.
Goodwill is initially measured at cost (being the excess of the aggregate of the consideration transferred). If the fair value of
the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly
identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to
be recognised at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the
aggregate consideration transferred, then the gain is recognised in profit or loss.
66 ADAIRS LIMITED
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment
testing, goodwill acquired in a business combination is allocated to the Group’s cash generating units that are expected to benefit
from the combination.
2.5. Significant accounting judgments, estimates and assumptions

In applying the Group’s accounting policies management continually evaluates judgments, estimates and assumptions based
on experience and other factors, including expectations of future events that may have an impact on the Group. All judgments,
estimates and assumptions made are believed to be reasonable based on the most current set of circumstances available to
management. Actual results may differ from the judgments, estimates and assumptions.
Significant judgments, estimates and assumptions made by management in the preparation of these financial statements:
a. Significant accounting judgments
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences as management considers that it is probable that future
taxable profits will be available to utilise those temporary differences.
Impairment of non-financial assets other than goodwill
The Group assesses impairment of all assets at each reporting date by evaluating conditions specific to the Group and to the
particular assets that may lead to impairment. These include product, manufacturing and retail performance, technology and
economic environments and future product expectations. If an impairment trigger exists, the recoverable amount of the assets
is determined. This involves value in use calculations, which incorporate a number of key estimates and assumptions.
Determining the lease term of contracts with renewal options
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option
to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is
reasonably certain not to be exercised.
The Group has the option, under some of its leases to lease the assets for additional terms of six months to eight years. The Group
applies judgement in evaluating whether it is reasonably certain to exercise the option to renew. That is, it considers all relevant
factors that create an economic incentive for it to exercise the renewal. After the commencement date, the Group reassesses
the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise
(or not to exercise) the option to renew (i.e., a change in business strategy).
The Group has included the renewal period as part of the lease term for some of its leases of retail stores, warehouses and office
space due to the significance of these assets to its operations.
Extension options are negotiated by management to provide flexibility in managing the leased-asset portfolio and align with the
Group’s business needs. The present value of lease payments to be made under these options considered reasonably certain
to be exercised have been included in the lease liability balance at 27 June 2021. The undiscounted potential future payments
at current rental rates under options that are not considered reasonably certain to be exercised at 27 June 2021 is $51,017,878
(2020: $42,900,000), which includes potential lease payments within the next five years of $10,461,937 (2020: $6,705,000)
should those options be exercised.
The Group also has a number of leases in holdover that are cancellable by the Group or the lessor with a short-term notice
period. The lease term for cancellable leases has been determined by assessing whether termination options are reasonably
certain to be exercised by Adairs. The Group’s exposure to future lease payments is not included in the measurement of lease
liabilities as cancellable leases ultimately depends on whether the Group agrees to renew the lease under revised terms or
decides to exit a lease.
Determining the leased asset
A leased asset exists when an entity receives ‘substantially all’ the economic benefits and controls the asset. The accounting
standards do not define a threshold for ‘substantially all’ (although it is generally accepted in practice to be a very high threshold)
and therefore management is required to exercise judgement. The Group has assessed that there is no leased asset on the new
National Distribution Centre. The Group has determined that upon commencement of the contract there is no identifiable asset as
the Group does not have the right to receive substantially all the economic benefits and control the asset.
b. Significant accounting estimates and assumptions
Impairment of goodwill and intangibles with indefinite useful lives
The Group determines whether goodwill and intangibles with indefinite useful lives are impaired at least on an annual basis.
This requires an estimation of the recoverable amount of the cash-generating units or group of cash generating units to which the
goodwill and intangibles with indefinite useful lives are allocated. These estimates are based on conditions existing and emerging
as at 27 June 2021, including management’s assessment of the future impacts of the COVID-19 pandemic, which is impacting the

Notes to the

markets within which the Group operates to varying degrees. The assumptions used in this estimation of the recoverable amount
and the carrying amount of goodwill and intangibles with indefinite useful lives are discussed in Note 10.
Share-based payments
Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which
depends on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to
the valuation model including the expected life of the share option or appreciation right, volatility and dividend yield and making
assumptions about them. The assumptions and models used for estimating fair value for share-based payment transactions are
disclosed in Note 26.
Long service leave provision
As discussed in Note 2.4(q), the liability for long service leave is recognised and measured at the present value of the estimated
future cash flows to be made in respect of all employees at reporting date. In determining the present value of the liability, attrition
rates and pay increases through promotion and inflation have been taken into account.
Make good provisions
Provision is made for the anticipated costs of future restoration of leased premises. The provision includes future cost estimates
associated with dismantling and removal of shop fittings and cleaning. These future cost estimates are discounted to their present
value. The calculation of this provision requires assumptions such as store closure dates and removal cost estimates.
Estimation of useful lives of assets
The estimation of the useful lives of assets has been based on historical experience as well as manufacturers’ warranties
(for plant and equipment) and lease terms (for shop fittings). In addition, the condition of the assets is assessed at least annually
and considered against the remaining useful life. Adjustments to useful life are made when considered necessary. Depreciation
charges are included in Note 9.
Net realisable value of inventories
Inventories are valued at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the
ordinary course of business. Management has assessed the value of inventory that is likely to be sold below cost using past
experience and judgement on the likely sell through rates of various items of inventory, and recorded a provision for this amount.
Revenue from contracts with customers
The recognition of revenue from contract with customers is subject to significant estimates in the following areas:
› Linen Lover membership program — identification of two performance obligations (Welcome Voucher and other ongoing
membership benefits) and estimation of the standalone selling price for each performance obligation based on the estimated
value attributed to each performance obligation.
› Right of returns provision — estimate of the quantity and value of goods that will be returned based on the expected value
method, being the best method to predict the amount of variable consideration entitled to by the Group.
Refer to Note 2.4(h) for further details in relation to the accounting policy for revenue from contracts with customers.
Measurement and classification of the Mocka earn-out arrangement
In reference to the Sale and Purchase Agreement related to the Mocka business combination, the Group has agreed to an earn-
out arrangement with the vendors. The method of determining the fair value of the Mocka earn-out arrangement changed as at
27 June 2021 (compared to the prior year ended 28 June 2020) due to a variation to the Sale and Purchase Agreement agreed in
June 2021. At the relevant reporting dates, the fair value was determined with respect to:
› As at 27 June 2021
Single fixed payment of NZ$48,000,000 expected to be paid in September 2021.
› As at 28 June 2020 and at the acquisition date
Agreed multiple of earnings before interest and tax over the 2021, 2022 and 2023 financial years. The determination of fair value
required estimates by management of future earnings before interest and tax, expected payment periods and discount rates.
A portion of the earn-out arrangement is contingent on certain vendors remaining in continuous employment for a defined period
from the acquisition date and this portion is recognised as an expense in the statement of profit and loss over the relevant period
of service (refer to Note 4(g)).
The portion of the earn-out arrangement that is not related to employment conditions is included as contingent consideration in
the business combination. The fair value of the contingent consideration is remeasured at each reporting date based on the above
outlined estimates.
68 ADAIRS LIMITED
Lease related estimates — Estimating the incremental borrowing rate
If the Group cannot readily determine the interest rate implicit in the lease, it uses its incremental borrowing rate (IBR) to measure
lease liabilities. The IBR is the rate of interest that the Group would have to pay to borrow over a similar term, and with a similar
security, the funds necessary to obtain an asset of a similar value to the right-of-use-asset in a similar economic environment.
The IBR therefore reflects what the Group would have to pay, which requires estimation when no observable rates are available
or when they need to be adjusted to reflect the terms and conditions of the lease. The Group estimates the IBR using observable
inputs when available and is required to make certain entity-specific estimates.
Note 3. SEGMENT REPORTING

For management purposes, the Group is organised into business units which form two reportable segments, being Adairs
and Mocka.
Operating segments are identified on the basis of internal reports to senior management about components of the Group that are
regularly reviewed by the directors and senior management who have been identified as the chief operating decision makers, in
order to allocate resources to the segment and to assess its performance and for which discrete financial information is available.
Information reported to the directors and senior management for the purposes of resource allocation and assessment of
performance is specifically focused on core products and services which forms two reportable operating segments.
The following table presents the financial performance and position of the Group’s operating segments for the 52 weeks ended
27 June 2021:
Adairs Mocka Consolidated

$’000 $’000 $’000
52 weeks ended 27 June 2021

Revenue
External customer 439,605 60,157 499,762
Inter-segment — — —
Total revenue 439,605 60,157 499,762
Income/(expenses)
Cost of sales (160,134) (36,335) (196,469)
Other income 166 8 174
Depreciation and amortisation expenses (43,350) (1,225) (44,575)
Salaries and employee benefits expense (96,384) (4,484) (100,868)
Occupancy expenses (4,815) (244) (5,059)
Advertising expenses (12,935) (2,629) (15,564)
Other expenses from ordinary activities (24,002) (3,069) (27,071)
Costs associated with the acquisition of Mocka (7,583) — (7,583)
Earnings before Interest and Tax 90,568 12,179 102,747
Finance expenses (7,346) (111) (7,457)
Profit before tax 83,222 12,068 95,290
Total assets 379,486 35,343 414,829
Total liabilities 241,133 9,036 250,169

Notes to the
NOTE 3: SEGMENT REPORTING continued

Adairs Mocka Consolidated
$’000 $’000 $’000

Revenue
External customer 359,946 28,987 388,933
Inter-segment — — —
Total revenue 359,946 28,987 388,933
Income/(expenses)
Cost of sales (149,447) (17,367) (166,814)
Other income 295 1 296
Depreciation and amortisation expenses (39,230) (88) (39,318)
Salaries and employee benefits expense (76,840) (2,025) (78,865)
Occupancy expenses (9,642) (424) (10,066)
Advertising expenses (10,080) (680) (10,760)
Other expenses from ordinary activities (18,754) (1,727) (20,481)
Costs associated with the acquisition of Mocka (3,884) — (3,884)
Earnings before Interest and Tax 52,364 6,677 59,041
Finance expenses (6,250) — (6,250)
Profit before tax 46,114 6,677 52,791
Total assets 367,012 22,116 389,128
Total liabilities 243,908 4,649 248,557
Note: Mocka was acquired by Adairs on 1 December 2019. The results of Mocka during the comparative period are for the 30 weeks ended 28 June 2020.
Group financing (including all finance costs and finance income) and other overhead charges are managed and monitored by the
Adairs segment and are not allocated to other segments.
The Group operated in one geographical segment for the 52 weeks ended 27 June 2021, being Australia and New Zealand.
70 ADAIRS LIMITED
Note 4. REVENUES AND EXPENSES
52 weeks 52 weeks
ended ended
27 June 2021 28 June 2020
$’000 $’000
(a) Revenue from contracts with customers

Set out below is the disaggregation of the Group’s revenue from contracts with customers:
Types of goods and services
Sale of goods and services — stores 312,718 264,710
Sale of goods and services — online 187,044 124,223
Total revenue from contracts with customers 499,762 388,933
(b) Other Income
Interest income 31 90
Net currency gains/(losses) — (55)
Other 143 261
174 296
(c) Depreciation and amortisation expenses included in the Statement of Profit or Loss
Depreciation of property, plant and equipment 9,204 7,217
Depreciation of right-of-use assets 34,009 31,389
Amortisation of computer software 1,362 712
44,575 39,318
(d) Finance expenses
Interest paid/payable and other finance costs 954 1,822
Interest on lease liabilities 3,866 4,181
Loan modification gain — (351)
Amortisation of borrowing costs 315 —
Discount expense on earn-out liabilities 2,322 598
7,457 6,250
(e) Salaries and employee benefits expense
Wages and salaries1 92,987 78,206
Government grant income — wage subsidies1 (6,077) (5,355)
Government grant repaid 1
6,077 —
Defined contribution superannuation expense 6,140 5,304
Share-based payment expense 1,741 710
100,868 78,865
1. During the 52 weeks ended 27 June 2021, the Group was entitled to receive gross government grants under the JobKeeper program totalling $10,742,000 (2020: $11,292,000). Of this
total amount:
› $4,665,000 related to the remuneration of employees who were not working or did not work sufficient hours to be otherwise remunerated more than the subsidy received or
receivable (2020: $5,937,000). This amount is included within Wages and salaries above.
› $6,077,000 related to the remuneration of other employees and is considered a benefit to the Group for employees who were otherwise remunerated more than the subsidy
received or receivable (2020: $5,355,000). This amount is disclosed separately from Wages and salaries above. During the period, the Group repaid the JobKeeper wage subsidy
benefit related to the 52 weeks ended 27 June 2021 to the Australian Government.

Notes to the
NOTE 4: REVENUES AND EXPENSES continued

52 weeks 52 weeks
ended ended
27 June 2021 28 June 2020
$’000 $’000
(f) Other expenses

Credit card and merchant fees 5,482 4,478
Professional fees 4,104 2,070
Storage costs 3,840 3,373
Packaging and consumables 1,965 2,069
Other 11,680 8,491
27,071 20,481
(g) Costs associated with the acquisition of Mocka Limited
Transaction costs — 2,139
Fair value remeasurement of contingent consideration (Note 12) 164 —
Employee benefits expense from earn-out arrangement (Note 12) 7,600 1,745
Other (181) —
7,583 3,884
Note 5. INCOME TAX

52 weeks 52 weeks
ended ended
27 June 2021 28 June 2020
$’000 $’000
The major components of income tax expense are:

Statement of Profit or Loss
Current income tax
Current income tax charge 32,501 19,113
Adjustments in respect of current income tax of previous years (81) (230)
Deferred income tax
Relating to origination and reversal of temporary differences (918) (1,855)
Adjustments in respect of deferred income tax of previous years 46 482
Income tax expense reported in the Statement of Profit or Loss 31,548 17,510
Statement of Other Comprehensive Income
Deferred income tax
Relating to origination and reversal of temporary differences (273) (74)
Income tax benefit reported in the Statement of Other Comprehensive Income (273) (74)
A reconciliation of income tax expense and the product of accounting profit before income tax
multiplied by the Group’s applicable income tax rate is as follows:
Accounting profit before income tax 95,290 52,791
At the statutory income tax rate of 30% (2020: 30%) 28,587 15,860
Adjustments in respect of current income tax of previous years (81) (230)
Adjustments in respect of deferred income tax of previous years 46 483
Non-deductible expenses 1
3,214 1,471
Effect of foreign tax rates (218) (74)
Income tax expense reported in the Statement of Profit or Loss 31,548 17,510
1. The majority of non-deductible expenses relate to costs associated with the acquisition of Mocka Limited.
72 ADAIRS LIMITED
Statement of Profit or Loss and
Statement of Financial Position Other Comprehensive Income
52 weeks 52 weeks
As at As at ended ended
27 June 2021 28 June 2020 27 June 2021 28 June 2020
$’000 $’000 $’000 $’000
Deferred income tax

Deferred income tax relates to the following:
Deferred tax assets
Inventory 356 245
Property, plant and equipment — 11
Lease liabilities 29,830 31,325
Other liabilities 3,670 2,387
Provisions 5,728 4,937
Non-recourse loan 124 124
Financial Instruments 69 —
Carry forward tax losses — 157
Other 125 —
Total deferred tax assets 39,902 39,186
Deferred tax liabilities
Trade and other receivables — (3)
Other assets (181) (177)
Property, plant and equipment (1,813) (49)
Right-of-use assets (26,774) (28,211)
Brand names (22,329) (22,657)
Unrealised foreign exchange 189 (42)
Financial instruments (24) (221)
Other payables (7) (8)
Total deferred tax liabilities (50,939) (51,368)
Net deferred tax liabilities (11,037) (12,182)
Amounts credited directly to profit and loss 872 1,373
Amounts credited directly to other comprehensive income 273 74
Deferred tax expense 1,145 1,447

Notes to the
Note 6. CASH AND CASH EQUIVALENTS
As at As at
27 June 2021 28 June 2020
$’000 $’000
Cash at bank 25,882 23,861

Cash on hand 88 61
Total cash and cash equivalents 25,970 23,922
Statement of Cash Flows Reconciliation

a. Reconciliation of net profit after tax to net cash flows from operating activities
52 weeks 52 weeks
ended ended
27 June 2021 28 June 2020
$’000 $’000
Net profit/(loss) after tax 63,742 35,281

Adjustments and non-cash items
Depreciation and amortisation expenses 44,575 39,318
Share-based payments expense 1,741 710
Costs associated with the acquisition of Mocka 7,583 —
Discount expense on earn-out liabilities 2,322 598
Payment of non-recourse loan to employee recognised in equity — (750)
Debt facility modification gain — (323)
Amortisation of borrowing costs 315 109
Changes in assets and liabilities
(Increase)/Decrease in trade and other receivables 673 (818)
(Increase)/Decrease in other assets (3,704) 3,308
(Increase)/Decrease in inventories (24,592) 7,085
Increase/(Decrease) in payables 14,040 (148)
Increase/(Decrease) in other liabilities 4,690 3,759
Increase/(Decrease) in deferred tax liabilities (872) (846)
Increase/(Decrease) in provisions 1,834 3,185
Increase/(Decrease) in current tax liabilities 4,525 6,839
Net cash flow from operating activities 116,872 97,307
74 ADAIRS LIMITED
b. Reconciliation of liabilities arising from financing activities
Non-cash
Non-cash changes
changes borrowing
As at Net modification costs As at
52 weeks ended 28 June 2020 cash flows gain amortised Other 27 June 2021
27 June 2021 $’000 $’000 $’000 $’000 $’000 $’000
Interest-bearing 24,927 (26,000) — 315 758 —

liabilities (Note 14)
Total liabilities from 24,927 (26,000) — 315 758 —
financing activities
Non-cash
Non-cash changes
changes borrowing
As at Net modification costs As at
52 weeks ended 30 June 2019 cash flows gain amortised Other 28 June 2020
28 June 2020 $’000 $’000 $’000 $’000 $’000 $’000
Interest-bearing 24,949 136 (351) 193 — 24,927

liabilities (Note 14)
Total liabilities from 24,949 136 (351) 193 — 24,927
financing activities
The reconciliation of Lease liabilities is detailed within Note 17.
Note 7. TRADE AND OTHER RECEIVABLES AND OTHER ASSETS
As at As at
27 June 2021 28 June 2020
$’000 $’000
Trade and other receivables

Other receivables 2,276 2,949
Trade and other receivables 2,276 2,949
Other assets
Prepaid expenses 8,807 5,392
Deposits 463 1,257
Contract assets 115 105
Other 758 —
Other assets 10,143 6,754
Current 12,419 9,703
Non-current — —
Total trade receivables and other assets 12,419 9,703
Other receivables are non-interest bearing and no material provision for impairment (based on expected credit losses) has been
recorded as at 27 June 2021 (2020: nil) as the amount is considered to not be material.

Notes to the
Note 8. INVENTORIES
As at As at
27 June 2021 28 June 2020
$’000 $’000
Stock on hand at lower of cost and net realisable value 58,125 35,540
Stock in transit at cost 9,871 7,864
Total inventories 67,996 43,404
During the 52 weeks ended 27 June 2021, $39,000 was recognised as an expense for inventories carried at net realisable value
(2020: $219,000 debited). This is recognised in cost of sales.
Note 9. PROPERTY, PLANT AND EQUIPMENT

Shop Fixtures Leasehold Computer Plant and Other
and Fittings Improvements Hardware Equipment Total
$’000 $’000 $’000 $’000 $’000
Cost
As at 30 June 2019 52,793 668 4,320 6,044 63,825
Additions 4,143 344 1,319 864 6,670
Acquisition of a subsidiary — 55 110 881 1,046
Disposals (2,597) — (10) (32) (2,639)
Exchange differences (59) (1) (3) (10) (73)
As at 28 June 2020 54,280 1,066 5,736 7,747 68,829
Additions 5,901 3 809 1,959 8,672
Additions – work in progress 836 47 — — 883
Disposals (2,926) — (11) (77) (3,014)
Exchange differences (10) — — (1) (11)
As at 27 June 2021 58,081 1,116 6,534 9,628 75,359
Depreciation and impairment
As at 30 June 2019 34,827 500 3,182 4,448 42,957
Acquisition of a subsidiary — 22 72 357 451
Depreciation charge for the year 5,692 15 724 788 7,219
Disposals (2,575) — (8) (25) (2,608)
Exchange differences (22) (3) (2) (6) (33)
As at 28 June 2020 37,922 534 3,968 5,562 47,986
Depreciation charge for the year 6,388 17 1,050 1,749 9,204
Disposals (2,922) — (10) (61) (2,993)
Exchange differences (5) — — (1) (6)
As at 27 June 2021 41,383 551 5,008 7,249 54,191
Net book value
As at 28 June 2020 16,358 532 1,768 2,185 20,843
As at 27 June 2021 16,698 565 1,526 2,379 21,168
Impairment testing of property, plant and equipment

The carrying values of property, plant and equipment are reviewed for impairment annually. If an indication of impairment
exists and where the carrying value of the asset exceeds the estimated recoverable amount, the assets or cash generating units
(CGU) are written down to their recoverable amount. The recoverable amount is the greater of fair value less costs of disposal
and value‑in-use. Value-in-use refers to an asset’s value based on the expected future cash flows arising from its continued use
discounted to present value using a pre-tax discount rate that reflect current market assessments of the risks specific to the asset.
Nil impairment loss was recognised during the 52 weeks ended 27 June 2021 (2020: nil impairment loss was recognised).
76 ADAIRS LIMITED
Note 10. INTANGIBLES
Brand
Names and
Software Trademarks Goodwill Total
$’000 $’000 $’000 $’000
Cost or fair value

As at 30 June 2019 6,643 41,317 89,837 137,797
Additions 399 1,394 — 1,793
Acquisition of a subsidiary 17 33,115 48,409 81,541
Disposals — — — —
Exchange differences (4) — — (4)
As at 28 June 2020 7,055 75,826 138,246 221,127
Additions 595 — — 595
Additions – work in progress 1,965 — — 1,965
Exchange differences (1) — — (1)
As at 27 June 2021 9,614 75,826 138,246 223,686
Amortisation and impairment
As at 30 June 2019 4,362 — 19,910 24,272
Amortisation 712 — — 712
Exchange differences — — — —
As at 28 June 2020 5,074 — 19,910 24,984
Amortisation 1,362 — — 1,362
Exchange differences — — — —
As at 27 June 2021 6,436 — 19,910 26,346
Net book value
As at 28 June 2020 1,981 75,826 118,336 196,143
As at 27 June 2021 3,178 75,826 118,336 197,340
Impairment testing of goodwill and intangibles with indefinite lives

Goodwill acquired through business combinations and brand names with indefinite lives have been allocated to the cash generating
units (“CGU”) for the purpose of impairment testing.
Carrying amount of goodwill and brand names allocated to the CGUs is as follows:
Adairs Mocka
$’000 $’000
Goodwill 57,532* 38,475*

Brand 42,711 33,115
* The allocation of goodwill excludes the goodwill arising from a deferred tax liability on indefinite life intangibles (brand names) acquired as part of the business combinations of
$12,395,000 for the Adairs CGU and $9,934,000 respectively for the Mocka CGU.

Notes to the
NOTE 10: INTANGIBLES continued

The Group performed its annual impairment test for the Adairs and Mocka CGUs as at 27 June 2021. The Group considers
the relationship between its enterprise value and its carrying amount, among other factors, when reviewing for indicators for
impairment. The recoverable amount of each CGU has been determined based on a value-in-use calculation using discounted cash
flow projections from financial budgets approved by senior management covering a five-year period.
The estimate of the recoverable amount of each CGU is based on conditions existing and emerging as at 27 June 2021, including
management’s assessment of the future impacts of the COVID-19 pandemic, which is impacting the markets within which the Group
operates to varying degrees.
The key assumptions in the estimate of the recoverable amount of each CGU is as follows:
As at 27 June 2021 As at 28 June 2020
Adairs Mocka Adairs Mocka

$’000 $’000 $’000 $’000
Pre-tax discount rate 12.05% 12.95% 11.80% 12.85%

Long-term (terminal) growth rate 2.25% 2.25% 2.25% 2.25%
Key assumptions used in value in use calculations

The calculation of value in use for the Adairs CGU is most sensitive to the following assumptions:
Gross margin Gross margins are based on average values achieved in the past.
Discount rate Discount rate calculation is based on the specific circumstances of the Group and is derived from its
weighted average cost of capital (WACC). The WACC takes into account both debt and equity. The cost
of equity is derived from the expected return on investment by the Group’s investors. The cost of debt is
based on the interest-bearing borrowings the Group is obliged to service. CGU specific risk is incorporated
by applying individual risk factors into the WACC.
Growth rate Rates are based on management’s best estimate of anticipated growth in revenue and expenses in the
short to medium term.
As the global outbreak of COVID-19 continues to progress and evolve, it is extremely challenging to predict the full extent and
duration of its impact on the Group’s business activities. The Group’s experience to date in both Australia and New Zealand
evidences our ability to respond and adapt to our customers’ changing needs, as reflected in our trading performance for the
The Group believes that the assumptions adopted in the value-in-use calculations reflect an appropriate balance between the
Group’s experience to date and the uncertainty associated with the COVID-19 pandemic. Whilst temporary store closures arising
from Government restrictions may impact Short-term results, the expected timing and nature of any such closures is not expected
to impact the long-term performance of the Group’s businesses and results of the impairment testing at 27 June 2021.
Accordingly, no impairment was recorded for the 52 weeks ended 27 June 2021 (2020: nil impairment).
There are no reasonable possible changes in key assumptions that could cause the carrying value of the CGUs to exceed its
recoverable amount.
78 ADAIRS LIMITED
Note 11. TRADE AND OTHER PAYABLES
As at As at
27 June 2021 28 June 2020
$’000 $’000
Trade creditors 21,321 17,960

Accrued expenses 19,368 9,774
Other payables 3,122 3,523
Total current trade and other payables 43,811 31,257
Current 43,811 31,257
Non-current — —
Total trade and other payables 43,811 31,257
Terms and conditions of the above trade and other liabilities:

› Trade payables are non-interest bearing and are normally settled on 30 to 120 day terms.
› Other payables are non-interest bearing and do not have settlement terms.
Note 12. EARN-OUT LIABILITIES

As at As at
27 June 2021 28 June 2020
$’000 $’000
Mocka contingent consideration 35,381 —

Mocka vendor remuneration provision 9,345 —
Total current earn-out liabilities 44,726 —
Mocka contingent consideration — 32,896
Mocka vendor remuneration provision — 1,745
Other 1,012 854
Total non-current earn-out liabilities 1,012 35,495
Current 44,726 —
Non-current 1,012 35,495
Total earn-out liabilities 45,738 35,495
Earn-out liabilities relate to future payments to be made with respect to brand name asset acquisitions and the Mocka business
combination.
As part of the purchase consideration for Mocka, the Group agreed to an earn-out arrangement. The original Sale and Purchase
Agreement was revised in June 2021 which altered the earn-out mechanism. As a result of this revision, the fair value of the
earn‑out was calculated based on the earn-out mechanism applicable at the respective reporting dates:
› As at 27 June 2021
Single fixed payment of NZ$48,000,000 expected to be paid in September 2021.
› As at 28 June 2020 and at the acquisition date
Agreed multiple of earnings before interest and tax over the 2021, 2022 and 2023 financial years. The fair value of the earn-out
liabilities was based on Level 3 techniques using estimates of future cash flows.
A portion of the earn-out arrangement is contingent on certain vendors remaining in continuous employment for defined periods
from the acquisition date. This portion is recognised as an expense in the statement of profit or loss over the relevant period of
service (refer to Note 4(g)).
The portion of the earn-out arrangement that is not related to employment conditions is included as contingent consideration in
the business combination. The fair value of the contingent consideration is remeasured at the reporting date with adjustments
recognised in the statement of profit or loss (refer to Note 4(g)), with a discount expense unwound and included within Finance
expenses (Note 4(d)) to reflect the time-value of money.

Notes to the
Note 13. OTHER LIABILITIES
As at As at
27 June 2021 28 June 2020
$’000 $’000
Current other liabilities

Total current other liabilities 15,034 10,721
Non-current other liabilities
Total non-current other liabilities 1,460 1,083
Current 15,034 10,721
Total trade and other payables 16,494 11,804
Other liabilities include deferred revenue with respect to the Linen Lover membership program, unredeemed gift cards,
undelivered customer orders, as well as other revenue from contracts with customers received in advance of recognition.
The remaining performance obligations expected to be recognised in more than one year (non-current other liabilities) relate
primarily to the Linen Lover membership program which will be satisfied over a two-year membership period from joining date.
The Group applies the practical expedient in AASB 15 and does not disclose information about the remaining performance obligation
on contracts that have an original expected duration of one year or less. Refer to Note 2.4(h) for revenue recognition policy.
Note 14. INTEREST-BEARING LOANS AND BORROWINGS
As at As at
Interest rate 27 June 2021 28 June 2020
% Maturity $’000 $’000
Non-current
Bank Loan – Facility A BBSW + 1.85 31 Mar 2023 — 24,927
Total non-current — 24,927
Current — —
Non-current — 24,927
Total interest-bearing loans and borrowings — 24,927
(a) Financing facilities available
At reporting date, the following non-shareholder financing
facilities had been negotiated with the bank and were available:
Term debt facilities available at the reporting date: 90,000 90,000
Term debt facilities used at the reporting date: — (26,000)
Multi-option facilities available at the reporting date: 6,500 6,500
Multi-option facilities used at the reporting date*: (837) (500)
Facilities unused at the reporting date: 95,663 70,000
* The $837,000 used on the multi-option facility represents bank guarantees.
In July 2021, the Group renegotiated the maturity date of its existing finance facilities to be extended by four months. The finance
facilities are now due to expire on 31 July 2023 which better reflects the reporting cycle of the Group. There were no further
material changes to the finance facilities.
The term debt facilities of $90,000,000 are available until maturity with the multi option facilities of $6,500,000 subject to an
annual review.
80 ADAIRS LIMITED
Note 15. PROVISIONS
Make good Total
a. Provisions $’000 $’000
As at 28 June 2020 913 913

Arising during the year 756 756
Utilised (28) (28)
Unwinding of discount rate and changes in the discount rate 11 11
As at 27 June 2021 1,652 1,652
Current — —
Total provisions 1,652 1,652
As at As at
27 June 2021 28 June 2020
b. Employee entitlements $’000 $’000
Current
Annual Leave 5,264 4,048
Long service leave 2,521 2,123
Total current 7,785 6,171
Non-current
Long service leave 1,498 1,277
Total non-current 1,498 1,277
Total employee entitlements 9,283 7,448
Total current 7,785 6,121
Total non-current 3,150 2,240
Total provisions 10,935 8,361
Nature and timing of provisions

Refer to note 2.4(t) and 2.5(b) for the relevant accounting policy and details of significant estimations and assumptions applied in
the measurement of these provisions.

Notes to the
Note 16. ISSUED CAPITAL AND RESERVES
As at As at
27 June 2021 28 June 2020
a. Authorised Shares Thousands Thousands
Ordinary Shares 169,077 169,077
Ordinary shares are fully-paid and have no par value. They carry one vote per share and the right to dividends. They bear no
special terms or conditions affecting income or capital entitlements of the shareholders and are classified as equity.
As at As at
27 June 2021 28 June 2020
$’000 $’000
Balance at the beginning of the period 74,098 68,349

Issued shares — 5,749
Exercise of share options1 (275) —
Balance at the end of the period 73,823 74,098
1 The exercise of share options was facilitated through a custodian arrangement with the Group paying $585,000 for the on-market purchase of ordinary shares in the Company. The
Group received $310,000 from the holders of the share options that were exercised.
As at As at
27 June 2021 28 June 2020
b. Share-based payment reserve $’000 $’000
Balance at the beginning of the period 289 329

Share-based payment expense 1,741 710
Issue of non-recourse loan — (750)
Balance at the end of the period 2,030 289
As at As at
27 June 2021 28 June 2020
c. Foreign currency translation reserve $’000 $’000
Balance at the beginning of the period (198) (27)

Foreign currency translation of foreign subsidiary 97 (171)
Balance at the end of the period (101) (198)
As at As at
27 June 2021 28 June 2020
d. Cash flow hedge reserve $’000 $’000
Balance at the beginning of the period 532 709

Transferred to Statement of Profit or Loss
Net gain on cash flow hedges (760) (1,012)
Income tax related the net gain on cash flow hedges 228 303
Recognised in Statement of Other Comprehensive Income
Net gain on cash flow hedges (151) 760
Income tax related to the net gain on cash flow hedges 45 (228)
Balance at the end of the period (106) 532
82 ADAIRS LIMITED
As at As at
27 June 2021 28 June 2020
e. Retained earnings $’000 $’000
Balance at the beginning of the period 65,850 48,957

Impact of adoption of new accounting standards — (5,118)
Net profit for the period 63,742 35,281
Dividends paid and declared during the period (40,578) (13,270)
Balance at the end of the period 89,014 65,850
Note 17. LEASE ARRANGEMENTS AND OTHER COMMITMENTS

As disclosed in the annual report for the 52 weeks ended 28 June 2020, the Group adopted AASB 2020-4 Amendments to
Australian Accounting Standards – COVID-19-Related Rent Concessions.
The amendments introduced a practical expedient into AASB 16 Leases which permits a lessee to elect not to account for changes
in lease payments as a lease modification where the revised consideration is substantially the same or less than the consideration
for the lease preceding the change, the reductions only affect payments which fall due before 30 June 2022 and there has been
no substantive change in terms and conditions.
Where the practical expedient has been applied, rent concessions have been accounted for as a reduction in Occupancy expenses
in the consolidated statement of profit or loss for the 52 weeks ended 27 June 2021. Other items included within Occupancy
expenses are primarily variable lease payments and outgoings.
Set out below are the carrying amounts of the Groups’ right-of-use assets and lease liabilities and the movement during the
52 weeks ended 27 June 2021:
Right-of-use Lease
assets liabilities
$’000 $’000
As at 1 July 2019 93,010 107,112

Additions 30,374 31,841
Additions through subsidiary 2,549 2,745
Depreciation expense (31,389) —
Interest expense — 4,181
Payments — (31,066)
Foreign currency difference (169) (213)
As at 28 June 2020 94,375 114,600
Additions 29,237 29,467
Depreciation expense (34,009) —
Interest expense — 3,866
Payments — (40,711)
Foreign currency difference (24) (28)
As at 27 June 2021 89,579 107,194

Notes to the
NOTE 17: LEASE ARRANGEMENTS AND OTHER COMMITMENTS continued

As at As at
27 June 2021 28 June 2020
$’000 $’000
Current lease liabilities 33,473 36,252

Non-current lease liabilities 73,721 78,348
107,194 114,600
The following are the amounts recognised in profit and loss:
52 weeks 52 weeks
ended ended
27 June 2021 28 June 2020
$’000 $’000
Depreciation expense of right-of-use assets 34,009 31,389

Interest expense on lease liabilities 3,866 4,181
Expense relating to short-term leases (included in Occupancy expense) 926 1,003
Variable lease payments (included in Occupancy expense) 7,327 9,568
COVID-19 rent concessions (included in Occupancy expense) (3,226) (506)
Total amount recognised in profit or loss 42,902 45,635
The Group had total cash outflows for leases of $42,898,000 in 2021 (2020: $41,131,000).
The maturity analysis of lease liabilities are disclosed in Note 19.
Note 18. DERIVATIVE FINANCIAL INSTRUMENTS

As at As at
27 June 2021 28 June 2020
$’000 $’000
Current assets
Forward currency contracts — cash flow hedges — 589
— 589
Non-current assets
Forward currency contracts — cash flow hedges 357 149
357 149
As at As at
27 June 2021 28 June 2020
$’000 $’000
Current liabilities
Forward currency contracts — cash flow hedges (507) —
(507) —
84 ADAIRS LIMITED
Forward currency contracts — cash flow hedges
The Group buys inventories that are purchased in US Dollars (USD). In order to protect against exchange rate movements and to
manage the inventory purchases process, the Group has entered into forward exchange contracts to purchase USD. Outstanding
contracts are hedging highly probable forecasted inventory purchases and the contract notional value is forecast to total less than
the expected level of total purchases of inventory in USD within 18 months.
Forward currency contracts are timed to mature when payments are scheduled to be made. These derivatives have met the
requirements to qualify for hedge accounting with movements recorded in other comprehensive income accordingly.
The Group is holding the following foreign currency contracts:
Maturity
< 1 month 1-3 months 3-6 months 6-9 months 9-12 months >12 months Total
As at 27 June 2021
Forward currency contracts
(highly probable forecast
inventory purchases)
› Notional amount 3,427 17,910 35,621 22,559 16,602 14,442 110,561
($’000)
› Average forward rate 0.7340 0.7442 0.7557 0.7622 0.7714 0.7805 —
(USD/AUD)
› Average forward rate 0.7185 0.7188 0.7206 — — — —
(USD/NZD)
As at 28 June 2020
(highly probable forecast
inventory purchases)
› Notional amount 526 14,006 31,646 13,251 15,386 13,081 87,896
($’000)
› Average forward rate 0.6891 0.6942 0.6927 0.6966 0.6941 0.6957 —
(USD/AUD)
› Average forward rate 0.6103 0.6281 0.6539 — — — —
(USD/NZD)
Notional Carrying
amount $’000 amount $’000 Line item in the statement of financial position
As at 27 June 2021 110,561 (150) Derivative financial instruments — liabilities

As at 28 June 2020 87,896 738 Derivative financial instruments — assets
Total hedging Total amount

gain/(loss) reclassified from Line item in
recognised in OCI OCI to profit or loss the statement of
($’000) ($’000) profit or loss

Highly probable forecast inventory purchases (150) 738 Cost of sales
Highly probable forecast inventory purchases 738 1,013 Cost of sales
There was no material hedge ineffectiveness arising from the Group’s forward currency contract hedging strategy during the
52 weeks ended 27 June 2021 (2020: nil). This is due to inventory purchases in USD exceeding the notional amount of forward
currency contracts taken out and maturing when payments are scheduled.

Notes to the
Note 19. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group’s principal financial instruments comprise receivables, payables, bank loans and overdrafts, cash and short-term
deposits, derivatives and lease liabilities.
Risk exposures and responses

The Group manages its exposure to key financial risks, including interest rate and currency risk in accordance with the Group’s
financial risk management policy. The objective of the policy is to support the delivery of the Group’s financial targets while
protecting future financial security.
With respect to credit risk, the overwhelming majority of the Group’s sales are on cash or cash equivalent terms with settlement
within 24 hours. As such, the Group’s exposure to credit risk is minimal. The Group trades only with recognised, creditworthy
third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification
procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad
debts is not significant.
The Group enters into derivative transactions, principally forward currency contracts. The purpose is to manage the currency risks
arising from the Group’s operations. The main risks arising from the Group’s financial instruments are interest rate risk, foreign
currency risk and liquidity risk.
i. Interest rate risk

The Group’s exposure to market interest rates relates primarily to the Group’s long-term unhedged debt obligations.
As at As at
27 June 2021 28 June 2020
$’000 $’000
Financial instruments
Cash and cash equivalents 25,970 23,922
Interest-bearing loans and borrowings — (24,927)
Net exposure 25,970 (1,005)
The following sensitivity analysis is based on the interest rate risk exposures in existence at the reporting date:
As at 27 June 2021, if interest rates had moved, as illustrated in the table below, with all other variables held constant, profit after
tax would have been affected as follows due to the higher/lower interest rate costs from variable debt and cash balances:
Judgments of reasonably possible movements:
52 weeks ended 52 weeks ended

27 June 2021 28 June 2020
$’000 $’000
Profit after tax higher/(lower)
+1% (100 basis points) 182 (7)

-0.5% (50 basis points) (91) 4
Significant assumptions used in the interest rate sensitivity analysis include:

› Reasonably possible movements in interest rates were determined based on the Group’s current credit rating, relationships
with finance institutions, the level of debt that is expected to be renewed as well as a review of the last two years’ historical
movements and economic forecaster’s expectations.
› The net exposure at reporting date is representative of what the Group was and is expecting to be exposed to in the next twelve
months from the reporting date.
86 ADAIRS LIMITED
ii. Foreign currency risk
As a result of large purchases of inventory denominated in USD, the Group’s Statement of Financial Position and Statement of
Profit or Loss can be affected significantly by movements in the USD/AUD exchange rates. The Group attempts to mitigate this risk
by entering into forward foreign exchange contracts, as detailed below.
At reporting date, the Group had the following exposure to USD foreign currency that is not covered by a designated cash flow hedge.
As at As at
27 June 2021 28 June 2020
$’000 $’000
Financial liabilities
Payables 6,405 4,174
The following sensitivity is based on the foreign currency risk exposures in existence at the reporting date:
As at 27 June 2021, had the AUD moved, as illustrated in the table below, with all other variables held constant, profit after tax
would have been affected as follows:
Judgments of reasonably possible movements:
27 June 2021 28 June 2020
$’000 $’000
Profit after tax higher/(lower)
AUD to USD +15% 585 381

AUD to USD -15% (791) (516)
Significant assumptions used in the foreign currency exposure sensitivity analysis include:
› Reasonably possible movements in foreign exchange rates were determined based on a review of the last two years’ historical
movements and economic forecaster’s expectations.
› The net exposure at balance date is representative of what the Group was and is expecting to be exposed to in the next twelve
months from reporting date.
iii. Liquidity risk

Liquidity risk arises from the financial liabilities of the Group and the Group’s subsequent ability to meet their obligations to repay
their financial liabilities as and when they fall due.
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts and
bank loans.

Notes to the
NOTE 19. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES continued

A. Non-derivative financial assets and liabilities
The following liquidity risk disclosures reflect all contractually fixed payables, repayments and interest resulting from recognised
financial liabilities as well as liquid financial assets as of 27 June 2021. For the other obligations the respective undiscounted
cash flows for the respective upcoming fiscal years are presented. The timing of cash flows for assets/liabilities is based on the
contractual terms of the underlying contract.
< 6 months 6 to 12 months 1 to 5 years > 5 years Total

$’000 $’000 $’000 $’000 $’000
As at 27 June 2021
Liquid financial assets
Cash and cash equivalents 25,970 — — — 25,970
Trade and other receivables 2,276 — — — 2,276
Trade and other payables (43,811) — — — (43,811)
Lease liabilities (20,846) (16,749) (73,804) (11,952) (123,351)
Earn-out liabilities (44,726) — (1,012) — (45,738)
Net outflow (81,137) (16,749) (74,816) (11,952) (184,654)

$’000 $’000 $’000 $’000 $’000
As at 28 June 2020
Liquid financial assets
Cash and cash equivalents 23,922 — — — 23,922
Trade and other receivables 2,949 — — — 2,949
Financial Liabilities
Trade and other payables (31,258) — — — (31,258)
Lease liabilities (22,371) (16,844) (71,573) (13,441) (124,229)
Earn-out liabilities — — (37,931) — (37,931)
Bank loans — — (26,000) — (26,000)
Net outflow (26,758) (16,844) (135,504) (13,441) (192,547)
B. Derivative financial liabilities

Due to the unique characteristics and risks inherent to derivative instruments the Group separately monitors the liquidity risk
arising from transacting in derivative instruments.
The table below details the liquidity risk arising from the derivative assets and liabilities held by the Group at the reporting date:

$’000 $’000 $’000 $’000 $’000
As at 27 June 2021
Derivatives — forward currency (675) 168 357 — (150)
contracts
Net outflow (675) 168 357 — (150)
88 ADAIRS LIMITED
$’000 $’000 $’000 $’000 $’000
As at 28 June 2020
Derivatives — forward currency 292 297 149 — 738
contracts
Net outflow 292 297 149 — 738
iv. Fair value

The Group uses various methods in estimating the fair value of a financial instrument. The methods comprise:
Level 1 Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 Valuation techniques for which the lowest level input that is significant to the fair value measurement directly
or indirectly observable
Level 3 Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable
Quoted market price represents the fair value determined based on quoted prices on active markets as at the reporting date
without any deduction for transaction costs.
For financial instruments not quoted in active markets, the Group uses valuation techniques such as present value techniques,
comparison to similar instruments for which market observable prices exist and other relevant models used by market participants.
These valuation techniques use both observable and unobservable market inputs.
Valuation Valuation Valuation Valuation

Level 2 Level 3 Total Level 2 Level 3 Total
$’000 $’000 $’000 $’000 $’000 $’000
Financial assets
Forward exchange — — — 738 — 738
contracts
Forward exchange (150) — (150) — — —
contracts
Earn-out liabilities — (45,738) (45,738) — (35,495) (35,495)
(150) (45,738) (45,888) 738 (35,495) (34,757)
Set out below is a comparison, by class, of the carrying amounts and fair value of the Group’s financial instruments, other than
those with carrying amounts that are reasonable approximations of fair values:
Carrying Carrying
Amount Fair Value Amount Fair Value
$’000 $’000 $’000 $’000
Forward exchange contracts (150) (150) 738 738
Earn-out liabilities (45,738) (45,738) (35,495) (35,495)
Bank loans — — (24,927) (24,927)
(45,888) (45,888) (59,684) (59,684)

Notes to the
Note 20. CAPITAL MANAGEMENT

For the purpose of the Group’s capital management, capital includes issued capital and all other equity reserves attributable to the
equity holders of the parent. The primary objective of the Group’s capital management is to maximise the shareholder value.
The Group manages its capital structure and adjusts in light of changes in economic conditions and the requirements of the financial
covenants. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital
to shareholders or issue new shares. The Group monitors capital using a gearing ratio, which is net debt divided by the sum of total
capital and net debt. The Group’s objective is to ensure the gearing ratio remains below 50%. The Group includes within net debt,
interest-bearing loans and borrowings, earn-out liabilities, less cash and short-term deposits, excluding discontinued operations.
As at As at
27 June 2021 28 June 2020
$’000 $’000
Interest-bearing loans and borrowings — 24,927

Earn-out liabilities 45,738 35,495
Less: cash and cash equivalents (25,970) (23,922)
Net debt 19,768 36,500
Equity 164,660 140,571
Capital and net debt 184,428 175,326
Gearing ratio 11% 21%
In order to achieve this overall objective, the Group’s capital management, amongst other things, aims to ensure that it meets
financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in
meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches of
the financial covenants of any interest-bearing loans and borrowings in the current period.
No changes were made in the objectives, policies or processes for managing capital during the 52 weeks ended 27 June 2021 and
Note 21. INFORMATION RELATING TO ADAIRS LIMITED (‘THE PARENT ENTITY’)
As at As at
27 June 2021 28 June 2020
$’000 $’000
Current assets 22 442

Total assets 129,227 126,608
Current liabilities (13,050) (8,583)
Total liabilities (13,464) (9,007)
Net assets 115,763 117,601
Issued capital 73,823 74,098
Retained earnings 39,161 42,464
Share-based payment reserve 2,779 1,039
Net Equity 115,763 117,601
Loss of the parent entity (2,725) (1,606)
Total comprehensive loss of the Parent entity (2,725) (1,606)
90 ADAIRS LIMITED
Note 22. RELATED PARTY DISCLOSURES
Terms and conditions of transactions with related parties other than KMP
There are no outstanding balances as at the 52 weeks ended 27 June 2021. There have been no guarantees provided or received
for any related party receivables or payables.
Compensation of key management personnel of the Group:
52 weeks 52 weeks
ended ended
27 June 2021 28 June 2020
$’000 $’000
Short-term employee benefit 2,070 1,808

Short-term incentives 1,365 959
Post-employment benefits 115 106
Termination benefits — —
Share-based payments 957 601
Total compensation to key management personnel 4,507 3,474
The amounts disclosed in the table are the amounts recognised as an expense during the reporting period related to key
management personnel.
Note 23. EARNINGS PER SHARE

Basic earnings per share (EPS) amounts are calculated by dividing the profit for the year attributable to ordinary equity holders of
the Parent by the weighted average number of ordinary shares outstanding during the year.
The following reflects the income and share data used in the basic and diluted EPS computations:
52 weeks 52 weeks
ended ended
27 June 2021 28 June 2020
$’000 $’000
Profit for the year attributable to ordinary equity holders of the Parent 63,742 35,281
Profit attributable to ordinary equity holders of the Parent for basic earnings 63,742 35,281
Profit attributable to ordinary equity holders of the Parent adjusted for the effect of dilution 63,742 35,281
As at As at
27 June 2021 28 June 2020
$’000 $’000
Weighted average number of ordinary shares for basic EPS 169,077 167,617
Share options 5,753 2,601
Weighted average number of ordinary shares for the effect of dilution 174,830 170,218
There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the
date of authorisation of these financial statements.

Notes to the
Note 24. INFORMATION RELATING TO SUBSIDIARIES

The consolidated financial statements of the Group include:
Equity Holding
As at As at
Country of 27 June 2021 28 June 2020
Name of Entity incorporation % %
Home & Décor Pty Limited Australia 100 100

Adairs Holdings Australia Pty Limited Australia 100 100
Adairs Retail Group Pty Limited Australia 100 100
Wilder Days Pty Limited Australia 100 100
Adairs New Zealand Limited New Zealand 100 100
Mocka Limited New Zealand 100 100
Mocka Holdings Pty Ltd Australia 100 100
Mocka Products Pty Ltd Australia 100 100
Note 25. DIVIDENDS
52 weeks 52 weeks
ended ended
27 June 2021 28 June 2020
$’000 $’000
Cash dividends on ordinary shares declared and paid:

Interim dividend for 2021: 13.0 cents per share (2020: Nil) 21,980 —
Proposed dividends on ordinary shares:
Final cash dividend for 2021: 10.0 cents per share (2020: 11.0 cents) 16,908 18,598
Proposed dividends on ordinary shares are subject to approval at the annual general meeting and are not recognised as a liability
as at 27 June 2021.
Franking credit balance

The amount of franking credits available for the subsequent financial year are:
52 weeks 52 weeks
ended ended
27 June 2021 28 June 2020
$’000 $’000
Franking account balance as at the end of the period at 30% 28,210 24,748
Franking credits that will arise from the payment of income tax payable 1,968 8,434
as at the end of the period
Franking debits that will arise from the payment of dividends as at the end of the period (7,246) (7,971)
Franking credits that will arise from the receipt of dividends recognised as receivables — —
at the reporting date
22,932 25,211
92 ADAIRS LIMITED
Note 26. SHARE-BASED PAYMENTS
Employees of the Group (the “participants”) have been granted share options in the Company under the Equity Incentive Plan
(“EIP”). The grants of share options occur in tranches at different time periods.
2017 Tranche
In November 2016, 1,860,000 share options were granted to participants under the EIP for nil consideration. The options vest if the
Service and Performance conditions are met. The Service condition requires the participants to be employed on a full-time basis
by an entity of the Group from Grant Date to 30 June 2020. There are two separate Performance conditions — an EPS Performance
condition and a Sales Performance (being like-for-like sales) condition. If these conditions are not met, the options will lapse
immediately. There is no cash settlement for the share options. The contractual life of each option granted is eight years.
2018 Tranche
In November 2017, 2,640,000 share options were granted to participants under the EIP for nil consideration. The options vest if the
by an entity of the Group from Grant Date to 30 June 2021. There are two separate Performance conditions — an EPS Performance
immediately. There is no cash settlement for the share options. The contractual life of each option granted is six years.
2019 Tranche
In October 2018, 2,250,000 share options were granted to participants under the EIP for nil consideration. The options vest if the
by an entity of the Group from Grant Date to 3 July 2022. There are two separate Performance conditions — an EPS Performance
immediately. There is no cash settlement for the share options. The contractual life of each option granted is six years.
2020 Tranche
In December 2019, 3,400,000 share options were granted to participants under the EIP for nil consideration. The options vest if
the Service and Performance conditions are met. The Service condition requires the participants to be employed on a full‑time
basis by an entity of the Group from Grant Date to 2 July 2023. There are two separate Performance conditions — an EPS
Performance condition and a Sales Performance (being like-for-like sales) condition. If these conditions are not met, the options
will lapse immediately. There is no cash settlement for the share options. The contractual life of each option granted is six years.
2021 Tranche
In November 2020, 3,000,000 share options were granted to participants under the EIP for nil consideration. The options vest
if the Service and Performance conditions are met. The Service condition requires the participants to be employed on a full‑time
basis by an entity of the Group from the grant date to 30 June 2024. There are two separate Performance conditions — an EPS
Performance condition and a Sales Performance (being total Group or Adairs segment sales, depending on the participant)
condition. If these conditions are not met, the options will lapse immediately. The contractual life of each option granted is
six years.
The fair value of each share option tranche is estimated at grant date by taking into account the terms and conditions upon which
the options were granted. The fair value of share options granted was estimated at the grant date using the following assumptions:
2021 Tranche 2020 Tranche 2019 Tranche 2018 Tranche 2017 Tranche
Share option pricing model Black Scholes Black Scholes Black Scholes Black Scholes Black Scholes
— Dividend yield 6.00% 8.00% 5.00% 5.00% 4.75%
— Expected volatility 60.00% 50.00% 45.00% 45.00% 32.50%
— Risk-free interest rate 0.31% 0.82% 2.23% 2.23% 2.11%
— Expected life of share options 4.8 years 4.8 years 4.8 years 4.8 years 5.8 years
— Exercise share price $4.04 $1.86 $2.40 $1.75 $2.00
Fair value of share options at $0.90 $0.38 $0.43 $0.39 $0.27
grant date (per share option)

Notes to the
NOTE 26. SHARE-BASED PAYMENTS continued

Information with respect to the number of share options granted is as follows:
As at As at
27 June 2021 28 June 2020
Number Number
Outstanding balance at beginning of the period 7,873,447 4,473,447

– Granted 3,000,000 3,400,000
– Forfeited — —
– Lapsed — —
– Exercised (155,069) —
– Expired — —
Outstanding balance at end of the period 10,718,378 7,873,447
The weighted average fair value of the share options granted during the 52 weeks ended 27 June 2021 was $0.90 (2020: $0.38).
The weighted average remaining contractual life of share options outstanding as at 27 June 2021 was 4.1 years (2020: 4.5 years).
For the 52 weeks ended 27 June 2021, the Group has recognised $1,741,000 of share-based payment expense in the Statement of
Profit or Loss (2020: $710,000).
During the comparative period being the 52 weeks ended 28 June 2020, a key management personnel was extended cash in the
form of a loan for $750,000 to purchase ordinary shares in the Company. The arrangement is a limited recourse loan which may
be settled through the return of the ordinary shares in the Company to the Group.
As a condition of the loan, Mr Gardner was required to invest a further $250,000 of personal funds to purchase shares in
the Company totalling $1,000,000. As part of this agreement, up to 55% of the loan will be forgiven progressively between
August 2022 until maturity in August 2027 as follows, subject to continued employment with the Company:
Date Forgiveness Amount
14 August 2022 $93,750

14 August 2023 $93,750
14 August 2024 $56,250
14 August 2025 $56,250
14 August 2026 $56,250
14 August 2027 $56,250
The balance of the loan at maturity, amounting to $337,500, must be repaid on or before 14 August 2027. Repayment of the loan
may also be made in full by returning the purchased shares under the arrangement back to the Company at any time during the
term of the loan and at maturity.
The non-recourse nature of the loan and the potential loan forgiveness give rise to benefits to Mr Gardner that are considered
share-based payments. The share-based payment expense is measured at fair value at the grant date and recognised as an
expense when the arrangement is considered to vest, being immediately at the grant date. The vesting date is considered to
be the grant date due to the non-recourse nature of the arrangement allowing Mr Gardner to return the subject shares to the
Company in order to extinguish the loan during the term to maturity. During the 52 weeks ended 28 June 2020, the share-based
payment expense recognised in the consolidated financial statements related to this agreement amounted to $472,000. There was
no further share-based payment expense recognised during the 52 weeks ended 27 June 2021.
The fair value of the non-recourse loan has been estimated at the grant date in different portions over the forgiveness period by
applying valuation methodologies consistent with the nature of the arrangement as a share option.
94 ADAIRS LIMITED
Note 27. EVENTS AFTER THE BALANCE SHEET DATE
On 6 July 2021, the Group renegotiated the maturity date of its existing finance facilities to be extended by four months.
The finance facilities are now due to expire on 31 July 2023 which better reflects the reporting cycle of the Group. There were
no further material changes to the finance facilities.
On 19 August 2021, the directors of Adairs Limited declared a final dividend on ordinary shares in respect of the 2021 financial year.
The total amount of the dividend is $16.9 million which represents a fully franked dividend of 10.0 cents per share. The dividend has
not been provided for in the 27 June 2021 Financial Report.
Subsequent to 27 June 2021, the Group’s Adairs store portfolio has been impacted by various Government imposed restrictions
related to COVID-19. This has resulted in temporary store closures however majority of the impacted stores continue to offer
Call & Collect and Call & Deliver services with processes and protocols in place to support the safety and wellbeing of our team
and customers.
Other than the above, no matters or circumstances have arisen since reporting date which significantly affected or may
significantly affect the operations of the company, the results of those operations, or the state of affairs of the Company.
Note 28. AUDITOR’S REMUNERATION

The auditor of Adairs Limited is Ernst & Young Australia.

27 June 2021 28 June 2020
$’000 $’000
Amounts received or due and receivable by Ernst & Young Australia for:
› Fees for auditing the statutory financial report of the parent covering the group and 313 270
auditing the statutory financial reports of any controlled entities
› Fees for other services
— Taxation services 49 26
— Advisory services 175 215
— Other — 110
Total fees to Ernst & Young Australia 537 621

27 June 2021 28 June 2020
$’000 $’000
Fees to other overseas member firms of Ernst & Young (Australia):

› Fees for auditing the financial report of any controlled entities 91 110
› Fees for other services
— Taxation services 9 —
Total fees to overseas member firms of Ernst & Young (Australia) 100 110
Total auditor’s remuneration 637 731
Auditors’ remuneration disclosed above relate to the audit of the statutory financial report of the Company and any other entity in
the consolidated group, fees for tax compliance, due diligence and other services.

SHAREHOLDER
INFORMATION
for the period ended 27 June 2021
The shareholder information set out below was applicable as at 2 August 2021.
Number of shareholders
There were 12,046 shareholders, holding 169,077,075 fully paid ordinary shares.
Distribution of equity securities

Analysis of numbers of equity holders by size of holding:
Range Ordinary Securities No. of Security holders
1 — 1,000 2,310,506 5,035

1,001 — 5,000 11,931,178 4,564
5,001 — 10,000 9,873,335 1,319
10,001 — 100,000 24,733,319 1,062
100,001 and over 120,228,737 66
Total 169,077,075 12,046
There were no holders of less than a marketable parcel of ordinary shares.
Equity security holders

The names of the twenty largest holders of quoted equity securities are listed below:
Ordinary Shares
Percentage of
Name Number held issued shares
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED 29,601,990 17.51

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 23,589,358 13.95
CITICORP NOMINEES PTY LIMITED 15,857,290 9.38
BNP PARIBAS NOMINEES PTY LTD 9,681,696 5.73
NATIONAL NOMINEES LIMITED 9,678,490 5.72
BNP PARIBAS NOMS PTY LTD 3,456,331 2.04
GRAHGER RETAIL SECURITIES PTY LTD 2,200,000 1.30
MICHAEL CHERUBINO INVESTMENTS PTY LTD 1,996,135 1.18
BOND STREET CUSTODIANS LIMITED 1,826,986 1.08
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – A/C 2 1,269,560 0.75
BOND STREET CUSTODIANS LIMITED 1,166,500 0.69
BRET R GAMBLE & JEREMY T BLAKE & RACHEL M BLAKE 1,067,430 0.63
JETA TRUSTEE (2017) LIMITED 1,067,430 0.63
CEMJ TRUSTEE LIMITED 1,067,430 0.63
BNP PARIBAS NOMINEES PTY LTD 875,297 0.52
MR TRENT PETERSON 860,000 0.51
BRISPOT NOMINEES PTY LTD 856,115 0.51
JEREMY AND LYNETTE KING SUPERANNUATION PTY LTD 775,000 0.46
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD 748,052 0.44
CANDAD PTY LTD 681,724 0.40
CS THIRD NOMINEES PTY LIMITED 604,941 0.36
BNP PARIBAS NOMS PTY LTD 593,000 0.35
109,520,755 64.77
96 ADAIRS LIMITED
Substantial Shareholdings
As at 2 August 2021, there were no substantial shareholders that the Company is aware of.
Voting Rights
The Company’s Constitution sets out the voting rights attached to ordinary shares. The voting rights relating to each class of
equity securities is as follows:
Ordinary Shares
On a show of hands at a General Meeting of the Company, every member present in person or by proxy shall have one vote.
On a poll, each person present in person or by proxy shall have one vote for each ordinary share held.
On market share acquisition

During FY21, 155,069 Adairs ordinary shares were purchased on market at an average price of $3.77 per share for the purposes of
employee incentive schemes.
There is no current on market buy-back of the Company’s shares.

This page has been left blank intentionally.
98 ADAIRS LIMITED
CORPORATE
INFORMATION
Adairs Limited
ABN 50 147 375 451
Directors
Brett Chenoweth (appointed 16 November 2020)
Michael Butler (resigned 26 October 2020)
Michael Cherubino
Kiera Grant
David MacLean
Trent Peterson
Mark Ronan
Kate Spargo
Simon West
Company Secretary
Fay Hatzis
Registered office
2 International Court
Scoresby
Victoria, 3179
Australia
Principal place of business

2 International Court
Scoresby
Victoria, 3179
Australia
Phone: 1800 990 475
Investor Relations website

investors.adairs.com.au
Share register
Link Market Services
Locked Bag A14
Sydney South NSW 1235
Phone: 1300 554 474
Auditors
Ernst & Young
Solicitors
Herbert Smith Freehills
ANNUAL REPORT 2021

Adairs Limited Appendix 4E: Preliminary Final Report

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Adairs Limited Appendix 4E: Preliminary Final Report

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ADAIRS LIMITED

1. DETAILS OF THE REPORTING PERIOD AND THE PRIOR CORRESPONDING PERIOD

2. RESULTS FOR ANNOUNCEMENT TO THE MARKET

Revenue from continuing operations Increase 28.5% 499,762

Revenue from continuing operations Increase 28.5% 499,762

2021 Interim dividend 13.0 cents 13.0 cents

Brief explanation of the figures reported above

ANNUAL REPORT 2021 1

5. CASH FLOW STATEMENT

7. DIVIDEND OR DISTRIBUTION REINVESTMENT PLAN DETAILS

8. STATEMENT OF CHANGES IN EQUITY

9. NET TANGIBLE ASSET BACKING PER ORDINARY SECURITY AS AT 27 JUNE 2021

Net tangible asset backing per ordinary security -$0.13 -$0.26

10. CONTROL GAINED OR LOST OVER ENTITIES IN THE FINANCIAL YEAR

11. DETAILS OF AGGREGATE SHARE OF PROFITS (LOSSES) OF ASSOCIATES

12. OTHER SIGNIFICANT INFORMATION

2021 ANNUAL GENERAL MEETING

ANNUAL REPORT 2021 1

Up from 32% last year

ANNUAL REPORT 2021 3

ANNUAL REPORT 2021 5

Dear Shareholder, COVID-impacted years, each of which

ANNUAL REPORT 2021 7

better enable customers to shop Adairs customers and team we contributed

ANNUAL REPORT 2021 9

ANNUAL REPORT 2021 11

CORPORATE GOVERNANCE STATEMENT

ANNUAL REPORT 2021 13

2021 Operating and Financial Review

FY21 FY20 Change

Revenue 499,762 388,933 28.5%

ANNUAL REPORT 2021 15

Adairs Strategic Update

Our profitable store formats

Our digital transformation

Mocka’s growth potential

Omni Supply Chain Strategy

7. Compound annual growth rate.

ANNUAL REPORT 2021 17

Material Business Risks

Risk Explanation Mitigation

ANNUAL REPORT 2021 19

Risk Explanation Mitigation

Significant changes in the state of affairs

Directors and Directors’ Interests

ANNUAL REPORT 2021 21

Executive Director Property and Business Development

ANNUAL REPORT 2021 23

Board Audit Nomination Remuneration

Director Held Attended Held Attended Held Attended Held Attended

Auditors Independence Declaration

Proceedings on behalf of the Company

ANNUAL REPORT 2021 25

Section 1 Remuneration Overview page 27

ANNUAL REPORT 2021 27

SECTION 2: REMUNERATION STRATEGY AND POLICY

SECTION 3: ROLE OF THE REMUNERATION COMMITTEE AND EXTERNAL ADVISERS

FY2021 FY20201 FY2019 FY20182 FY20172

Sales ($’000) $499,762 $388,933 $344,430 $314,769 $264,964

SECTION 5: SENIOR EXECUTIVE REMUNERATION STRUCTURE

ANNUAL REPORT 2021 29

At risk At risk At risk

11. DETAILS OF AGGREGATE SHARE OF PROFITS (LOSSES) OF ASSOCIATES